Credit information sharing and cost of debt: Evidence from the introduction of credit bureaus in developing countries

Samuel Fosu, Henry Agyei-Boapeah, Neytullah Ciftci

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

We investigate the effect of credit information sharing on cost of debt, with particular focus on the introduction of credit bureaus in developing countries. Using a large dataset of firms from 28 developing countries over the period 2004–2019, we find that firms’ average cost of debt significantly declines following the introduction of credit bureaus. This finding is robust to an alternative measure of cost of debt, several firm- and country-level controls and to firm- and year-fixed effects. The reduction in cost of debt is more pronounced for less transparent firms and for firms domiciled in countries with weak institutional framework.

Original languageEnglish
Pages (from-to)783-810
Number of pages28
JournalFinancial Review
Volume58
Issue number4
DOIs
Publication statusPublished - Nov 2023
Externally publishedYes

Keywords

  • cost of debt
  • credit bureaus
  • information sharing
  • institutional quality
  • transparency

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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