More competition in banking, less information—research reveals the impacts on potential borrowers

A new study conducted by Filippo De Marco of Bocconi University, Milan, and Silvio Petriconi of the Catolica Lisbon School of Business and Economics, published in the Journal of Financial and Quantitative Analysis reveals that competition among banks significantly reduces the production of information about potential borrowers. This result emerges against a backdrop of deregulation of interstate branching in the United States, which has seen a decline in positive yields of loan announcements, especially for opaque and bank-dependent firms.

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