Credit Market Structure and Information Sharing Mechanisms

Abstract

This chapter explores the relationship between the credit market structure and the existence of a white and/or black credit register. A black register compiles historical information and no on-line information, as is the case in a white register. Banks enter the market via a two-stage procedure: given they entered, they decide about their number of outlets. We show that in the white register case more but smaller banks arise than under the black register. These findings are tested using a simultaneous equation model. The evidence shows that the model performs fairly well.

We are grateful to L. Bettendorf, T. Gehrig and the participants of the workshops at the K.U. Leuven, the EARIE 1992 conference in Stuttgart and the EEA 1992 conference in Dublin. The second author acknowledges the financial support of F.K.F.O. nr. 2.0073.90.