WORKING PAPER SERIES
Information Acquisition in Antebellum U.S.
Credit Markets: Evidence from Nineteenth-
Century Credit Reports
Claire Brennecke
Federal Deposit Insurance Corporation
September 2016
FDIC CFR WP 2016-04
fdic.gov/cfr
NOTE: Staff working papers are preliminary materials circulated to stimulate discussion and critical
comment. The analysis, conclusions, and opinions set forth here are those of the author(s) alone and do not
necessarily reflect the views of the Federal Deposit Insurance Corporation. References in publications to this
paper (other than acknowledgement) should be cleared with the author(s) to protect the tentative character
of these papers.
Information Acquisition in Antebellum U.S.
Credit Markets: Evidence from Nineteenth-
Century Credit Reports
Claire Brennecke
Federal Deposit Insurance Corporation
September 2016
FDIC CFR WP 2016-04
fdic.gov/cfr
NOTE: Staff working papers are preliminary materials circulated to stimulate discussion and critical
comment. The analysis, conclusions, and opinions set forth here are those of the author(s) alone and do not
necessarily reflect the views of the Federal Deposit Insurance Corporation. References in publications to this
paper (other than acknowledgement) should be cleared with the author(s) to protect the tentative character
of these papers.
Information Acquisition
in Antebellum U.S. Credit Markets*
Evidence From Nineteenth-Century Credit Reports
Claire Brennecke†
September 2016
Abstract
If a lender can easily obtain more information about a borrower, under what conditions will he choose to do so? In
this paper, I use a hand-collected set of records from the nineteenth century credit reporting agency, R.G. Dun & Com-
pany, that allows me to directly observe when lenders acquired information about their borrowers. I find evidence that
lenders did not always seek information even though it was inexpensive and easily available. Instead, lenders were
more likely to start accessing the reports for a borrower after they heard bad news, be it aggregate or borrower-specific.
These results show that lenders require relatively more information about borrowers during an economic downturn,
suggesting that information constraints likely play a more important role in credit market outcomes during these times.
Furthermore, lenders responded to bad news about a borrower in their loan portfolio by acquiring information about
other borrowers. This result sheds light on how one default can affect the larger credit network through contagious
information acquisition.
JEL Codes: N2, N21, G24, E32
Keywords: Credit Reporting; Information Acquisition; Credit Cycles; U.S. Financial History
*I am grateful to acknowledge financial support received for this project from the National Science Foundation, the Business History Conference
Rovensky Fellowship, the Economic History Association, the Yale Program in Economic History, and the Harvard Business School Alfred D.
Chandler Jr. Travel Fellowship. I would like to thank Naomi Lamoreaux, Gary Gorton, and Tim Guinnane for advising on this project. I also thank
Sriya Anbil, Timothy Christensen, Alex Cohen, Jose-Antonio Espin-Sanchez, Marc Flandreau, Kate Fritzdixon, Mary Hansen, Eric Hilt, Gerald
Jaynes, Yan Lee, Meredith Startz, Craig Palsson, and participants at the Yale Economic History Lunch, the Harvard Economic History Tea, the 2014
Business History Conference, NBER Development of the American Economy Summer Institute, and the 2014 Economic History Conference for
numerous helpful comments and suggestions. I am particularly grateful to the staff of the HBS Baker Library Historical Collections for the months
of support and to David Silvernail and Jack McGrath for research assistance.
† Federal Deposit Insurance Corporation. E-mail: cbrennecke@fdic.gov.
The analysis, conclusions, and opinions set forth here are those of the author alone and do not necessarily reflect the views of the Federal Deposit
Insurance Corporation.
in Antebellum U.S. Credit Markets*
Evidence From Nineteenth-Century Credit Reports
Claire Brennecke†
September 2016
Abstract
If a lender can easily obtain more information about a borrower, under what conditions will he choose to do so? In
this paper, I use a hand-collected set of records from the nineteenth century credit reporting agency, R.G. Dun & Com-
pany, that allows me to directly observe when lenders acquired information about their borrowers. I find evidence that
lenders did not always seek information even though it was inexpensive and easily available. Instead, lenders were
more likely to start accessing the reports for a borrower after they heard bad news, be it aggregate or borrower-specific.
These results show that lenders require relatively more information about borrowers during an economic downturn,
suggesting that information constraints likely play a more important role in credit market outcomes during these times.
Furthermore, lenders responded to bad news about a borrower in their loan portfolio by acquiring information about
other borrowers. This result sheds light on how one default can affect the larger credit network through contagious
information acquisition.
JEL Codes: N2, N21, G24, E32
Keywords: Credit Reporting; Information Acquisition; Credit Cycles; U.S. Financial History
*I am grateful to acknowledge financial support received for this project from the National Science Foundation, the Business History Conference
Rovensky Fellowship, the Economic History Association, the Yale Program in Economic History, and the Harvard Business School Alfred D.
Chandler Jr. Travel Fellowship. I would like to thank Naomi Lamoreaux, Gary Gorton, and Tim Guinnane for advising on this project. I also thank
Sriya Anbil, Timothy Christensen, Alex Cohen, Jose-Antonio Espin-Sanchez, Marc Flandreau, Kate Fritzdixon, Mary Hansen, Eric Hilt, Gerald
Jaynes, Yan Lee, Meredith Startz, Craig Palsson, and participants at the Yale Economic History Lunch, the Harvard Economic History Tea, the 2014
Business History Conference, NBER Development of the American Economy Summer Institute, and the 2014 Economic History Conference for
numerous helpful comments and suggestions. I am particularly grateful to the staff of the HBS Baker Library Historical Collections for the months
of support and to David Silvernail and Jack McGrath for research assistance.
† Federal Deposit Insurance Corporation. E-mail: cbrennecke@fdic.gov.
The analysis, conclusions, and opinions set forth here are those of the author alone and do not necessarily reflect the views of the Federal Deposit
Insurance Corporation.