Abstract
This paper examines how access to borrower-level credit information affects loan pricing and risk assessment. I focus on the auto loan market, which is dominated by nonbank financial institutions (NBFIs), and exploit the 2019 launch of Israel’s national credit registry, which for the first time provided NBFIs with comprehensive borrower-level information. Using variation in registry usage across NBFIs, I implement a difference-in- differences design. Registry adoption reduced interest rate spreads by roughly 0.3 percentage points, with the effect exceeding one percentage point over time. Moreover, it weakened the link between pricing and loan-to-value ratios among highly leveraged loans, indicating a shift from collateral-based toward borrower-level risk pricing. Delinquency rates also declined relative to those of bank lenders. The results provide causal evidence of the impact of credit information in markets characterized by severe informational frictions, with implications for credit market regulation.
Keywords: Credit Registry, Consumer Credit, Information Asymmetry, Non-Bank Financial Institutions, Auto Loans, Risk-Based Pricing.
JEL Classification code: G21, G23, D82.