Implementing a Kenyan Credit Information Sharing System: Progress and Challenges

POLITICAL & ECONOMIC RESEARCH COUNCIL by Michael Turner, Ph.D. & Robin Varghese, Ph.D. Nairobi, Kenya – December 9th, 2008 Implementing a Kenyan Credit Information Sharing System: Progress and Challenges

[object Object],[object Object],[object Object],[object Object],[object Object],Agenda

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Introduction

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Why are We Here?

Types of Reporting Systems ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Benefits of Sharing Credit Information ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],The Economy Lenders Consumers

Lender Benefits from Credit Information Sharing Furnishers can reduce losses.

Borrower Benefits from Credit Information Sharing ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Table 5: Change in the Acceptance Rate with Reporting Regime Change U.S., with Utility Data U.S., with Telecom. Data U.S. Full-File Colombia Full-File (without = 1.00) (without = 1.00) (Neg. only = 1.00) (Neg. only = 1.00) Ethnicity Asian 1.14 1.08 Black 1.21 1.11 1.28 Hispanic 1.22 1.17 1.37 Other 1.11 1.11 White 1.08 1.08 1.22 Age 18-25 1.14 1.1 1.47 18.31 (c) 26-35 1.06 1.06 36-45 1.05 1.06 1.22 6.48 (d) 46-55 1.06 1.06 1.21 4.54 (e) 56-65 1.06 1.06 1.20 3.85 (f) >65 1.14 1.13 1.19 Household Income (000) <20 1.26 1.22 1.36 (a) 20-29 1.15 1.14 1.3 (b) 30-49 1.1 1.08 1.24 50-99 1.06 1.05 1.21 >99 1.03 1.03 1.18 Gender Female 1.09 1.08 12.39 Male 1.08 1.08 5.91 (a) Actual Range is <15,000; (b) Actual Range is 15,000-29,000; (c) Actual Range is 18-32; (d) Actual Range is 32-42, (e) Actual Range is 42-50; (f) Actual Range is > 57.

Economic Benefits from Credit Information Sharing * p < 0.1 ** p < 0.05 ***p < 0.01 Source: IMF International Financial Statistics; World Bank, Doing Business database ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

PERC Estimations Consistent With Harvard/World Bank Study ,[object Object],[object Object],[object Object],* Simeon Djankov Caralee McLiesh Andrei Shleifer, “Private Credit In 129 Countries.” National Bureau Of Economic Research, Working Paper 11078, http://papers.nber.org/papers/w11078.pdf

[object Object],[object Object],[object Object],[object Object],[object Object],Finance is Crucial to Economic Growth *Derived from findings of Ross Levine, “Financial Development and Economic Growth: Views and Agenda” Journal of Economic Literature, Vol. 25(June 1997), pp. 688–726. Their findings are consistent with those of other studies, see Jose De Gregorio and Pablo Guidotti, “Financial Development and Economic Growth.” World Development , Vol. 23, No. 3, (March 1995) pp. 433-448. Their reported impacts were larger.

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Wide Uses in Lending At the core of a rich information sharing system: sound business logic .

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Why Regulations?

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Banking (Credit Reference Bureau) Regulations 2008

[object Object],[object Object],[object Object],[object Object],[object Object],Proposed Constitution and Code of Conduct for CPA

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],State of Implementation: Approach

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Bank Interviews: Topics/Focus

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Bank Interviews: Topics/Focus

Finding 1A: Furnishers Need Clarification ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Finding 1B: Furnishers Need Clarification ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Finding 2: Challenges for Banks ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Finding: Need for Further Clarification for CRBs ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Immediate Clarification v. Evolving Industry Standards ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Immediate Clarification Issues for CBK ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Perhaps Chief Finding ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Explaining the Chief Finding ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

At The Same Time… One cannot let the perfect be the enemy of the good…

Considerations for Data Format Clarification ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Considerations for Transmission Structure Clarifications ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

CRB Licensing & Re-licensing ,[object Object],[object Object],[object Object],[object Object]

Technical Operational Challenges for Bank Compliance ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Certification for CRBs by Int’l Standards ,[object Object],[object Object],[object Object],[object Object],[object Object]

CBK Must Avoid Over-Clarification ,[object Object],[object Object],[object Object],[object Object],[object Object]

On Chief Finding ,[object Object],[object Object],[object Object],[object Object]

Reality Check… ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

POLITICAL & ECONOMIC RESEARCH COUNCIL 100 Europa Drive, Suite 403 Chapel Hill, NC 27517 USA www.infopolicy.org Phone: +1.919.338.2798

Implementing a Kenyan Credit Information Sharing System: Progress and Challenges

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Implementing a Kenyan Credit Information Sharing System: Progress and Challenges