Plausibly Exogenous [763] - Credit Information (02/20/2022)
LHS Variable
Loan performance
RHS Variable
Availability of information about loan applicants
Source of Exogenous Variation
On April 18, 2006, Prosper made an unannounced change in the amount of information that it provided about loan applicants. At its launch to the public, lenders only had access to coarse data on a potential borrower’s credit-worthiness: debt to income ratio and credit score range, called “credit grade,” but nothing more. Beginning April 18, 2006, Prosper allowed lenders to access data on a loan applicant’s homeownership status, number of current and past delinquent accounts, number of public records (such as bankruptcies or liens) in the last 10 years, credit inquiries, total number of credit lines in the borrower’s name, and the first date of credit activity on the borrower’s credit report, in addition to the previously available credit grade and debt to income ratio.
- Miller (2015), “Information and default in consumer credit markets: Evidence from a natural experiment”