Information Sharing in Banking: A Collusive Device?

Thomas Gehrig and ,

No 2911, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We show that information sharing among banks may serve as a collusive device. An informational sharing agreement is an a-priori commitment to reduce informational asymmetries between banks in future lending. Hence, information sharing tends to increase the intensity of competition in future periods and, thus, reduces the value of informational rents in current competition. We contribute to the existing literature by emphasising that a reduction in informational rents will also reduce the intensity of competition in the current period, thereby reducing competitive pressure in current credit markets. We provide a large class of economic environments, where a ban on information sharing would be strictly welfare enhancing.

Keywords: Information sharing; Collusion; Imperfectly competitive credit markets (search for similar items in EconPapers)
JEL-codes: D82 G21 L15 (search for similar items in EconPapers)
Date: 2001-08
References: Add references at CitEc
Citations: View citations in EconPapers (14)

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Working Paper: Information Sharing in Banking: A Collusive Device? (2000)
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