The Economics and Regulation of Financial Privacy An International Comparison of Credit Reporting Systems

Markets would not exist without the exchange of information. Information exchange is the initial and most basic phase of every economic transaction, without it, market participants would not trust each other and no trade would take place. This holds for all transactions across all markets at any time. However, it is of special importance for financial markets that are known for their dependence on information. In household credit markets, the disclosure of personal information is a precondition for any credit c- tract. This book is the first comprehensive analysis of the economics and regulation of financial privacy with an emphasis on credit reporting. Credit reporting agencies collect, analyze and distribute billions of information items on millions of borrowers in modern credit societies. They provide the fundamentally vital informational structure in credit markets. Their networks span across financial services providers, retailers, insurance firms, telecommunication providers as well as public utility providers and in some countries even transportation companies. Employers and landlords are also increasingly using credit data for their professional decisions. Therefore, any book on credit reporting is naturally a book about financial privacy or the economics of privacy in general. The impetus for my study of privacy was an article by Joe Stiglitz and Michael Rothschild published in 1997. In this article, the authors discuss possible efficiency gains in - surance markets through the disclosure of the human genetic code.