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Federal Reserve Bank of Philadelphia
Working Papers
Credit Ratings, Private Information, and Bank Monitoring Ability
Leonard I. Nakamura
Kasper Roszbach
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.


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Leonard I. Nakamura & Kasper Roszbach, Credit Ratings, Private Information, and Bank Monitoring Ability, Federal Reserve Bank of Philadelphia, Working Papers 16-14, 16 Jun 2016.
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Keywords: Monitoring; Banks; Credit Bureau; Private Information; Public Information; Ratings; Regulation; Supervision; Overconfidence
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