Credit information sharing and banking crises: An empirical investigation

► We study the effect of information sharing on the likelihood of banking crises. ► We show that information sharing reduces the likelihood of banking crises. ► The result applies to both public registries and private bureaus. ► We show that information sharing reduces the negative effect of credit growth. We study the effect of credit information sharing on the likelihood of banking crises using a comprehensive cross-country dataset for the period from 1975 to 2006. The empirical analysis shows that credit information sharing reduces the likelihood of banking crises and it does more so in low income countries. The effect is statistically and economically significant, and applies to both public registries and private bureaus. Furthermore, we show that credit information sharing reduces the impact of rapid credit growth on banking crises. Specifically, rapid credit growth is less likely to lead to a banking crisis in countries with credit information sharing.