Description:

Speaker: Nathalie Basto

Title: Real Effects of Firms' Credit Information

Abstract: This study examines the effects of limiting credit information for firms through Colombia's Clean Slate policy, a one-time amnesty that deleted negative credit reports for previously delinquent SMEs. Using a difference in discontinuities design based on the revenue cutoff for SME classification, we find that restricting information increased credit access for prior delinquents without raising interest rates for this group. In contrast, clean-record firms were negatively affected by the informational externality induced by the policy, experiencing reduced credit access and significantly higher interest rates as banks adjusted their risk assessments. The policy tightened credit markets, with suggestive evidence of impacts on firm balances, highlighting the trade-offs of such interventions in balancing credit access and market efficiency.