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Credit Information Systems in Less Developed Countries: A Test with Microfinance in Guatemala

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  • Luoto, Jill
  • McIntosh, Craig
  • Wydick, Bruce

Abstract

Increases in formal sector lending among the poor have created a need for credit information systems that provide potential lenders with borrower information. In this article we present fixed-effects estimations that attempt to measure the effect of a newly implemented credit information system in Guatemala. Our results indicate that improved screening effects from the system caused the level of portfolio arrears to decline approximately 2 percentage points after it was implemented in branch offices. We observe an even more substantial and significant effect of the information system in reducing late payments that occur during the loan cycle.

Suggested Citation

  • Luoto, Jill & McIntosh, Craig & Wydick, Bruce, 2007. "Credit Information Systems in Less Developed Countries: A Test with Microfinance in Guatemala," Economic Development and Cultural Change, University of Chicago Press, vol. 55(2), pages 313-334, January.
  • Handle: RePEc:ucp:ecdecc:y:2007:v:55:i:2:p:313-34
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    File URL: http://dx.doi.org/10.1086/508714
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    References listed on IDEAS

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    1. Vercammen, James A, 1995. "Credit Bureau Policy and Sustainable Reputation Effects in Credit Markets," Economica, London School of Economics and Political Science, vol. 62(248), pages 461-478, November.
    2. Hoff, Karla & Stiglitz, Joseph E., 1998. "Moneylenders and bankers: price-increasing subsidies in a monopolistically competitive market," Journal of Development Economics, Elsevier, vol. 55(2), pages 485-518, April.
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    Cited by:

    1. Verónica Balzarotti & Alejandra Anastasi, 2013. "Does Competition for Novice Borrowers Hurt Access to Finance? An Analysis in a Context of High Risk and Low Outreach," Ensayos Económicos, Central Bank of Argentina, Economic Research Department, vol. 1(69), pages 101-149, December.
    2. Adjognon, S & Liverpool-tasie, S. L. & Shupp, R., 2016. "Sustaining Input on Credit Through Dynamic Incentives and Information Sharing:," Food Security Collaborative Policy Briefs 234951, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    3. Caterina Giannetti & Nicola Jentzsch & Giancarlo Spagnolo, 2010. "Information Sharing and Cross-border Entry in European Banking," CEIS Research Paper 178, Tor Vergata University, CEIS, revised 21 Dec 2010.
    4. Frisancho Veronica, 2012. "Signaling Creditworthiness in Peruvian Microfinance Markets: The Role of Information Sharing," The B.E. Journal of Economic Analysis & Policy, De Gruyter, pages 1-43.
    5. repec:spr:fininn:v:1:y:2015:i:1:d:10.1186_s40854-015-0017-2 is not listed on IDEAS
    6. Deininger, Klaus & Liu, Yanyan, 2009. "Determinants of repayment performance in Indian micro-credit groups," Policy Research Working Paper Series 4885, The World Bank.
    7. Martinez Peria, Maria Soledad & Singh, Sandeep, 2014. "The impact of credit information sharing reforms on firm financing?," Policy Research Working Paper Series 7013, The World Bank.
    8. Manuel Hernandez & Maximo Torero, 2014. "Parametric versus nonparametric methods in risk scoring: an application to microcredit," Empirical Economics, Springer, vol. 46(3), pages 1057-1079, May.
    9. Brown, Martin & Zehnder, Christian, 2010. "The emergence of information sharing in credit markets," Journal of Financial Intermediation, Elsevier, vol. 19(2), pages 255-278, April.
    10. repec:eee:riibaf:v:42:y:2017:i:c:p:1123-1136 is not listed on IDEAS
    11. Laptieva, Nataliia, 2016. "Information sharing and the volume of private credit in transition: Evidence from Ukrainian bank-level panel dataAuthor-Name: Grajzl, Peter," Journal of Comparative Economics, Elsevier, vol. 44(2), pages 434-449.
    12. Ioannidou, Vasso P. & Penas, María Fabiana, 2010. "Deposit insurance and bank risk-taking: Evidence from internal loan ratings," Journal of Financial Intermediation, Elsevier, vol. 19(1), pages 95-115, January.
    13. Behr, Patrick & Sonnekalb, Simon, 2012. "The effect of information sharing between lenders on access to credit, cost of credit, and loan performance – Evidence from a credit registry introduction," Journal of Banking & Finance, Elsevier, vol. 36(11), pages 3017-3032.

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