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Information-Sharing and Cross-Border Entry in European Banking. ECRI Research Report No. 11, 22 February 2010

Giannetti, Caterina and Jentzsch, Nicola and Spagnolo, Giancarlo. (2010) Information-Sharing and Cross-Border Entry in European Banking. ECRI Research Report No. 11, 22 February 2010. UNSPECIFIED.

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    Abstract

    Information asymmetries can severely limit the cross-border border expansion of banks, if entering banks can only obtain incomplete information about potential new clients. Such asymmetries are reduced by credit registers, which distribute financial data on bank clients. This ECRI research report investigates the interaction of credit registers and bank entry modes (in the form of branching as well as mergers and acquisitions) by using a new set of time-series cross-section data for the EU-27 countries. We study how the presence of public and private credit registers and the kind of information exchanged affected the modes of bank entries during the period 1990–2007. Our analysis shows that the existence of both types of registers increases the share of branching among the overall bank entries. Additionally, the establishment of public registers reduces concentration ratios and some banking competition indicators (such as overhead costs/assets). The introduction of a private credit bureau, on the other hand, has no effect on concentration ratios, but positively contributes to competition (by cutting interest rate margins). These findings suggest that credit registers facilitate the direct entry of banks through a reduction of information asymmetries, which in turn intensifies competition.

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    Item Type: Other
    Uncontrolled Keywords: Public credit registers; private credit registers.
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > economic and financial affairs > Single Market > capital, goods, services, workers
    Subjects for EU documents: UNSPECIFIED
    EU Series: UNSPECIFIED
    EU Series do not use: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Centre for European Policy Studies (Brussels) > ECRI Research Reports
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 04 Aug 2010
    Page Range: p. 52
    Last Modified: 08 Apr 2014 12:07
    URI: http://aei.pitt.edu/id/eprint/14442

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