Learning about Competitors: Evidence from SME Lending
Abstract
We study how small and medium enterprise (SME) lenders react to information about their competitors' contracting decisions. To isolate this learning from lenders' common reactions to unobserved shocks to fundamentals, we exploit the staggered entry of lenders into an information-sharing platform. Upon entering, lenders adjust their contract terms toward what others offer. This reaction is mediated by the distribution of market shares: lenders with higher shares or that operate in concentrated markets react less. Thus, contract terms are shaped not only by borrower or lender fundamentals but also by the interaction between information availability and competition.
View research
Citation
Darmouni, Olivier, and Andrew Sutherland. "Learning about Competitors: Evidence from SME Lending." Review of Financial Studies (forthcoming).
Each author name for a Columbia Business School faculty member is linked to a faculty research page, which lists additional publications by that faculty member.
Each topic is linked to an index of publications on that topic.