Improving Credit Information, Bank Regulation, and Supervision: On the Role and Design of Public Credit Registries

This paper analyzes how data in public credit registries (PCRs) can be used to strengthen bank supervision and to improve the quality of credit analysis by financial institutions.

The paper states that:

• Banks should gather information and establish relationships with borrowers. However, they often do not;
• Public sector intervention is needed to enhance credit information sharing through the provision of credit information sharing services by central banks or banking supervisors known as public credit registries (PCRs);
• In countries with PCRs, supervised financial institutions are required to provide data on individual borrowers, on a periodic basis. Core PCR data is information on the identity of borrowers, the size of any loans or credit lines outstanding with reporting institutions and their status;
• There were various motivations behind the development of PCR.

This paper reviews:

• Current uses of PCRs and discuses the relationship between these competing roles and the design of PCRs;
• Potential pitfalls related to PCR design and management;
• The relationship between private credit bureaus and PCRs;
• The ways in which PCRs can be used to improve the quality of credit analysis by financial institutions and strengthen bank regulation and supervision.

The paper concludes by explaining why PCRs and credit bureaus are complementary and not substitutes.