Learning about Competitors: Evidence from SME Lending
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. Up...
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| Format: | Article |
| Language: | English |
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Oxford University Press (OUP)
2021
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| Online Access: | https://hdl.handle.net/1721.1/130400 |
| _version_ | 1826195774950604800 |
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| author | Sutherland, Andrew Gordon |
| author2 | Sloan School of Management |
| author_facet | Sloan School of Management Sutherland, Andrew Gordon |
| author_sort | Sutherland, Andrew Gordon |
| collection | MIT |
| description | 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. |
| first_indexed | 2024-09-23T10:15:14Z |
| format | Article |
| id | mit-1721.1/130400 |
| institution | Massachusetts Institute of Technology |
| language | English |
| last_indexed | 2024-09-23T10:15:14Z |
| publishDate | 2021 |
| publisher | Oxford University Press (OUP) |
| record_format | dspace |
| spelling | mit-1721.1/1304002021-04-08T03:27:00Z Learning about Competitors: Evidence from SME Lending Sutherland, Andrew Gordon Sloan School of Management 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. 2021-04-07T13:52:36Z 2021-04-07T13:52:36Z 2020-05 2021-04-07T12:30:38Z Article http://purl.org/eprint/type/JournalArticle 0893-9454 https://hdl.handle.net/1721.1/130400 Darmouni, Olivier and Andrew Sutherland. “Learning about Competitors: Evidence from SME Lending.” Review of Financial Studies (May 2020) © 2020 The Author(s) en 10.1093/RFS/HHAA109 Review of Financial Studies Creative Commons Attribution-Noncommercial-Share Alike http://creativecommons.org/licenses/by-nc-sa/4.0/ application/pdf Oxford University Press (OUP) SSRN |
| spellingShingle | Sutherland, Andrew Gordon Learning about Competitors: Evidence from SME Lending |
| title | Learning about Competitors: Evidence from SME Lending |
| title_full | Learning about Competitors: Evidence from SME Lending |
| title_fullStr | Learning about Competitors: Evidence from SME Lending |
| title_full_unstemmed | Learning about Competitors: Evidence from SME Lending |
| title_short | Learning about Competitors: Evidence from SME Lending |
| title_sort | learning about competitors evidence from sme lending |
| url | https://hdl.handle.net/1721.1/130400 |
| work_keys_str_mv | AT sutherlandandrewgordon learningaboutcompetitorsevidencefromsmelending |