Credit information sharing reduces loan defaults in developing countries, boosting financial stability.
Credit information sharing can help reduce loan default rates for banks in developing countries. A study looked at data from 879 banks in 87 developing countries over 9 years and found that sharing credit information lowers default rates. The impact of credit information sharing on default rates depends on how competitive the banking market is. Interestingly, the quality of governance in a country does not significantly affect the relationship between credit information sharing and loan default rates.