Title

Creditor rights, information sharing, and bank risk taking

Document Type

Journal article

Source Publication

Journal of Financial Economics

Publication Date

6-1-2010

Volume

96

Issue

3

First Page

485

Last Page

512

Keywords

Creditor rights; Information sharing; Bank risk taking; Financial crisis; Economic growth

Abstract

Looking at a sample of nearly 2,400 banks in 69 countries, we find that stronger creditor rights tend to promote greater bank risk taking. Consistent with this finding, we also show that stronger creditor rights increase the likelihood of financial crisis. On the plus side, we find that stronger creditor rights are associated with higher growth. In contrast, we find that the benefits of information sharing among creditors appear to be universally positive. Greater information sharing leads to higher bank profitability, lower bank risk, a reduced likelihood of financial crisis, and higher economic growth.

DOI

10.1016/j.jfineco.2010.02.008

Print ISSN

0304405X

Publisher Statement

Copyright © 2010 Elsevier B.V. All rights reserved.

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Full-text Version

Publisher’s Version

Recommended Citation

Houston, J. F., Lin, C., Lin, P., & Ma, Y. (2010). Creditor rights, information sharing, and bank risk taking. Journal of Financial Economics, 96(3), 485-512. doi: 10.1016/j.jfineco.2010.02.008