1. Discussion of Liberti-Sturgess-Sutherland: Information sharing and lender specialization: Evidence from the U.S. Commercial lending market Edinburgh, May 2017 Moqi Groen-Xu, LSE

2. The setting: equipment finance
PayNet Credit Bureau: Credit bureau for equipment finance
$1.5 trillion total investment in equipment and software in the US, 2015 (IHS Markit)
$1.02 trillion (68%) was financed, 47% of which by banks
This compares to a $1.9 trillion commercial & industrial loans by commercial banks (Forbes)
8 out of 10 (78%) of businesses use at least one form of financing when acquiring equipment
Strong competition, abundant liquidity
Much growth driven by information technology
Specialization and information matters: collaterals are very different from each other
Good setting to study competition dynamics and specialization
How does it compare to other lending markets?

3. Poaching
Giannetti, Liberti, and Sturgess 2017: Banks manipulate credit ratings before joining a credit bureau to avoid poaching
This paper: “There is no indication that lenders systematically shift their portfolios in the periods before entry”
Why is the PayNet setting so different?
Different country
Specific industry
Voluntary adoption

4. Selection into PayNet Joining PayNet allows lenders to expand
This should be most lucrative for lenders trying to expand
That’s fine: interesting to see that they manage and how
Would be great to understand how these lenders compare to the rest of the population
Interpretation of the magnitudes

5. The long-run
Digital technology has enabled information sharing and expansion into new markets
There are still barriers to entry: loan officers have a lot of inside information
How much does size matter?
Over time, how well do small lenders do in this highly concentrated market?
Interpretation of results suggest borrowers are able to untap new financing sources. Is that true?
What is the trajectory to the future? When will we reach saturation?

6. Thank you for giving me this paper to discuss
Not my area: I learned a lot
Great setting, interesting question, tight research design
Research question is interesting not only in equipment financing, but lending in general, information sharing in general (patient information, education information...) – would be great to know how much we can generalize.