RESEARCH ARTICLE Credit information sharing and non-performing loans: The moderating role of creditor rights protection Michael Adusei 1 | Ngozi Adeleye 2,3 1 Department of Accounting and Finance, Kwame Nkrumah University of Science and Technology, Kumasi, Ghana 2 Department of Economics and Development Studies, Covenant University, Ota, Nigeria 3 Centre for Economic Policy and Development Research, Covenant University, Ota, Nigeria Correspondence Michael Adusei, Kwame Nkrumah University of Science and Technology, Kumasi, Ghana. Email: madusei10@yahoo.com, madusei. ksb@knust.edu.gh Abstract This study uses data from 132 countries to investigate the effect of credit infor- mation sharing on non-performing loans (NPLs) as well as whether the effect is sensitive to creditor rights protection. The results show that credit informa- tion sharing improves NPLs, while creditor rights protection worsens NPLs. Generally, we observe that in the presence of creditor rights protection, the positive impact of credit information sharing on NPLs is higher. We also observe that in the presence of credit information sharing, creditor rights pro- tection reduces NPLs. We, therefore, argue that there is complementary effect of credit information sharing and creditor rights protection on NPLs in the study countries. Further analysis involving breaking the data into income groups shows that credit information sharing slows down NPLs in high income, upper-middle income and lower-middle income countries. It does not significantly impact NPLs in low-income countries. KEYWORDS credit information sharing, creditor rights, moderation analysis, non-performing loans JEL CLASSIFICATION E44; E50; E52; E58 1 | INTRODUCTION Three related questions drive this study: (a) Does credit information sharing explain non-performing loans (NPLs)? (b) Does the effect of credit information sharing 1 on NPLs change in the presence of creditor rights protec- tion 2 ? (c) Is the effect of credit information sharing on NPLs sensitive to the income groups of countries? We highlight three points to justify answering the above ques- tions. First, answers to the above questions are crucial for policy formulation, given the tight connection between NPLs and financial crises. Unchecked NPLs could lead to a financial crisis with severe consequences for economic growth and development. This explains why in Europe debate on the management and disposal of NPLs has been triggered by the massive stock of NPLs (Bolognesi, Compagno, Miani and Tasca, 2020). Indeed, the devastat- ing effects of 2007–2009 financial crisis highlight the importance of paying considerable attention to NPLs. Thus, interrogating whether information sharing is a sig- nificant predictor of NPLs using macrodata is a step in the right direction. Second, information sharing is increasingly gaining prominence in financial markets. However, to the best of knowledge, information and belief, the question of whether its impact on NPLs differs by income groups of countries remains unanswered. Third, should evidence pointing to the sensitivity of the effect of credit informa- tion sharing on NPLs to income groups of countries be found, policy makers in the various income groups will know the appropriate policy direction to take. Despite the accumulating technological break- throughs that seem to have bridged the information gap Received: 30 April 2020 Revised: 3 December 2020 Accepted: 3 December 2020 DOI: 10.1002/ijfe.2398 Int J Fin Econ. 2021;1–14. wileyonlinelibrary.com/journal/ijfe © 2020 John Wiley & Sons, Ltd. 1