Working Paper

Credit Ratings, Private Information, and Bank Monitoring Ability

Abstract: In this paper, we use credit rating data from two large Swedish banks to elicit evidence on banks' loan monitoring ability. For these banks, our tests reveal that banks' internal credit ratings indeed include valuable private information from monitoring, as theory suggests. Banks' private information increases with the size of loans.

Keywords: Monitoring; Banks; Credit Bureau; Private Information; Public Information; Ratings; Regulation; Supervision; Overconfidence;

JEL Classification: D82; G18; G21; G24; G32; G33;

Bibliographic Information

Provider: Federal Reserve Bank of Philadelphia

Part of Series: Working Papers

Publication Date: 2016-06-16

Number: 16-14

Pages: 37 pages