Information sharing, credit booms, and financial stability: lessons for developing economies
Credit information sharing reduces financial fragility in advanced and developing countries, but transmission channels are different
Abstract
The global financial crisis has highlighted the vulnerability of financial systems and stressed the need for improving the management of financial vulnerability. The financial stability issue in low-income countries has received less attention in recent years, insofar as they have been less impacted by the global financial crisis than emerging economies.
The authors investigated the determinants of financial fragility in advanced and developing countries, focusing on the interaction between credit booms and credit information sharing systems. The results showed that credit information sharing reduces financial fragility in both groups, but transmission channels are different. For advanced and emerging countries, credit information sharing reduces the likelihood of credit booms and mitigates their detrimental impact on financial fragility. For less developed countries, credit information sharing mainly has a direct effect by improving credit portfolio quality.
There is a working paper and policy brief. This work is part of the ‘Financial Volatility, Macroprudential Regulation and Economic Growth in Low-Income Countries’ project
Citation
Samuel Guerineau, Florian Leon, 2016. Information sharing, credit booms, and financial stability, Fondation pour les études et recherches sur le développement international (FERDI) Working Papers P159
Links
Information sharing, credit booms, and financial stability: working paper (PDF, 390KB)