Borrower Leakage from Costly Screening

• Tác giả: Irani Arraiz
• Ngôn ngữ: eng
• Ký hiệu phân loại: 025.6 Circulation services
• Thông tin xuất bản: Elsevier, 2022
• Bộ sưu tập: Tài liệu truy cập mở
• ID: 298362
• Chủ đề: 1. BANKING; 2. FINANCIAL INCLUSION; 3. FINANCIAL SUPERVISION; 4. INFORMATION SPILLOVER; 5. SME FINANCE

Tóm tắt

We provide evidence that commercial lenders in Peru suffer leakages in their loan approval process. Leveraging a discontinuity in the loan approval process of a large bank, we find that receiving a loan approval from the bank causes loan applicants to receive offers from other financial institutions as well. Competing lenders captured almost three quarters of the new loans to previously financially excluded borrowers. Importantly, many of these borrowers never took a loan from our partner bank, even after our partner bank approved them. Lenders may therefore underinvest in screening new borrowers and expanding financial inclusion, as their competitors reap some of the benefit. Our results highlight that information spillovers between lenders may operate outside of credit registries.