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What If Borrowers Were Informed About Credit Reporting? Two Randomized Field Experiments 2022-05-30

Subject:What If Borrowers Were Informed About Credit Reporting? Two Randomized Field Experiments

Guest:Xiumin Martin, Professor of Accounting, Washington University

Host:Zhang Ran, Assistant Professor, ACEM-SJTU

Time:Friday, June 3, 2022, 9:00-10:30

Venue:Tencent Meeting

(Please send email to by 12:00 June. 2th for meeting number and password.)


Using two randomized field experiments, we examine how warning individual retail borrowers that their loan performance will be reported to a public credit registry before and after the loan take-up affects their borrowing behavior. We show that credit warnings reduce default rates by 3.7–7 percentage points and increase loan take-up rates by 4.1 percentage points, which suggests that credit warnings benefit both lenders and borrowers. The main drivers appear to be borrowers’ anticipation of a reduction in lenders’ informational rents and improved repayment incentives. Moreover, the reduction in default rates is comparable for borrowers who receive the credit warning before and after the loan take-up. As credit warnings received before but not after a loan take-up can affect the borrower pool, and thus the overall credit risk of the pool, the results suggest that credit warnings have little net effect on the pool’s credit risk due to selection.

Guest Bio:

Professor Xiumin Martin joined Olin Business School in 2007 after graduating from the University of Missouri in Columbia. Her research focuses on the role of financial information in the capital market - promoting debt contracting efficiency and improving the efficiency of asset allocation. She currently serves as the editor of The Accounting Review and the associate editor of Management Science.