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Information sharing, credit booms and financial stability: Do developing economies differ from advanced countries?

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  • Guérineau, Samuel
  • Léon, Florian
Abstract
This paper analyses the impact of credit information sharing on financial stability, drawing special attention to its interactions with credit booms. A probit estimation of financial vulnerability episodes—identified by jumps in the ratio of non-performing loans to total loans—is run for a sample of 159 countries divided into two sub-samples according to their level of development: 80 advanced or emerging economies and 79 less developed countries. The results show that: i) credit information sharing reduces financial fragility for both groups of countries; ii) for less developed countries, the main effect is the direct effect (reduction of NPL ratio once credit boom is controlled), suggesting a portfolio quality effect; iii) credit information sharing also mitigates the detrimental impact of a credit boom on financial fragility but this result holds only for advanced and emerging countries and for household credit booms; and iv) the depth of information sharing has a negative impact on the likelihood of credit booms (but not the coverage of IS).

Suggested Citation

  • Guérineau, Samuel & Léon, Florian, 2019. "Information sharing, credit booms and financial stability: Do developing economies differ from advanced countries?," Journal of Financial Stability, Elsevier, vol. 40(C), pages 64-76.
    • Handle: RePEc:eee:finsta:v:40:y:2019:i:c:p:64-76
    DOI: 10.1016/j.jfs.2018.08.004
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    More about this item

    Keywords

    Information sharing; Financial stability; Credit booms;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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