Credit bureaus, corruption and banking stability

Abstract

This study assesses the impact that credit bureaus can have on the occurrence of banking crises, using data for 32 countries over the period 2004-2016 while considering the interference effect of corruption. Different levels of income are considered in order to check for the stability of the relationship. We also test for the existence of a threshold effect driving the credit bureau-banking stability nexus. Estimation outcomes suggest that more credit bureaus are correlated with less banking instability. Moreover, estimation outcomes show that curbing corruption improves the quality of information on delinquent borrowers shared among these institutions and can thus enhance the soundness of the banking system. Our findings also report the existence of a nonlinear relationship in the private and public credit bureaus and banking stability nexus. 2022 Elsevier B.V.