Information Sharing and Credit: Firm-Level Evidence from Transition Countries ppt

WORKING PAPER NO. 178

Information Sharing and Credit:

Firm-Level Evidence from Transition Countries

Martin Brown, Tullio Jappelli and Marco Pagano

May 2007

University of Naples Federico II University of Salerno Bocconi University, Milan

CSEF - Centre for Studies in Economics and Finance – UNIVERSITY OF SALERNO

84084 FISCIANO (SA) - ITALY

Tel. +39 089 96 3167/3168 - Fax +39 089 96 3167 – e-mail: [email protected]

WORKING PAPER NO. 178

Information Sharing and Credit:

Firm-Level Evidence from Transition Countries

Martin Brown*

, Tullio Jappelli** and Marco Pagano***

Abstract

We investigate whether information sharing among banks has affected credit market performance in the

transition countries of Eastern Europe and the former Soviet Union, using a large sample of firm-level data. Our

estimates show that information sharing is associated with improved availability and lower cost of credit to

firms, and that this correlation is stronger for opaque firms than transparent firms. In cross-sectional estimates,

we control for variation in country-level aggregate variables that may affect credit, by examining the differential

impact of information sharing across firm types. In panel estimates, we also control for the presence of

unobserved heterogeneity at the firm level and for changes in selected macroeconomic variables.

Keywords: information sharing, credit access, transition countries

JEL Classification: D82, G21, G28, O16, P34

Acknowledgements: We benefited from the comments of Mariassunta Giannetti, Luigi Pistaferri, Alessandro

Sembenelli, Greg Udell and seminar participants at the University of Turin, the Swiss National Bank, the

Ancona Conference on the Changing Geography of Banking, the 8th Conference of the ECB-CFS Research

Network on Financial Integration and Stability in Europe, and the 2007 Skinance conference. We also thank

Caralee McLiesh of the World Bank and Utku Teksov of the EBRD for kindly providing us with data, Lukas

Burkhard for research assistance and the Unicredit Group for financial support.

*

Swiss National Bank (e-mail: [email protected])

** University of Naples Federico II, CSEF and CEPR (e-mail: [email protected])

*** University of Naples Federico II, CSEF and CEPR (e-mail: [email protected])