The effect of public credit registries on investment efficiency

Abstract

Credit information sharing is a mechanism through which creditors learn more about relevant credit information of potential and existing borrowers. In this thesis, I investigate the impact of credit information sharing on firms' investment efficiency. I utilize the staggered adoption of public credit registries (PCR) to proxy for mandatory information sharing and examine its impact on firms' investment efficiency. Consistent with the view that that the introduction of PCR affects borrowers' investment behaviors through mitigating problems of information asymmetry and credit inaccessibility, I document that information sharing is significantly and positively associated with firms' investment efficiency. I further find that this positive effect is stronger among firms in a relatively weak information environment, those in economies with strong private monitoring, those in countries with a greater emphasis on debt financing, and those in economies in which the banking system has a high degree of information monopoly. Overall, my thesis provides novel insights into a positive important economic impact on firms arising from information sharing in credit markets.