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Asia-Pacific Credit Coalition. Lessons for Information Sharing Standards in APEC. By Marlena Hurley, TransUnion CRIF Presentation for The Advisory Group on APEC Financial System Capacity-Building of Asia-Pacific of the APEC Business Advisory Council Moscow 6 May 2008. About APCC.

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Asia pacific credit coalition l.jpg

Asia-Pacific Credit Coalition

Lessons for Information Sharing Standards in APEC

By Marlena Hurley, TransUnion CRIF

Presentation for

The Advisory Group on APEC Financial System Capacity-Building of Asia-Pacific of the APEC Business Advisory Council

Moscow

6 May 2008


About apcc l.jpg
About APCC

  • The Asia Pacific Credit Coalition is

    • A coalition committed to promoting credit reporting standards within APEC.

    • An affiliate organization of the non-profit Political and Economic Research Council (PERC).

  • Mission

    • To development and promote the adoption of sound information sharing and credit reporting standards in the APEC region.

    • To develop and demonstrate standards that are based upon proven principles and solid evidence.

  • In that APEC is the largest, economic region, the diffusion of standards to member economies key is a step in economic development for hundreds of millions.

  • In pursuit of goal, APCC

    • Hosts educational seminars with national regulators and policy makers.

    • Reaches out to APEC staff

    • Engages press and media briefings

    • Develops Country-specific and regional economic impact analyses

    • Provides Industry executive briefings and outreach


The issues on the eve of credit reporting reform l.jpg
The issues on the eve of credit reporting reform

  • What information should be reported?

  • Which sectors should be encouraged to report?

  • How is the size and distribution of lending affected?

  • What forms of registry ownership work best?


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Common findings

Full-file (positive and negative payment) and comprehensive (across many sectors) reporting:

  • increases lending to the private sector especially among lower social segments more than other reporting regimes; and,

  • results in better loan performance than segmented and negative-only reporting;

  • private bureaus with comprehensive data increase lending to the private sector.


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    Effects of full-file & comprehensive reporting on access to credit

    Results of simulations using real credit files

    • 4 economies, and 10,000s to millions of files each study

    • Produced consistent results (greater credit access to a loan portfolio performance target)

      • approximately additional 10% gain access

      • much more in other cases

    • Consistent with statistical tests that use country level observations


    Distributional consequences of full file vs negative only l.jpg
    Distributional consequences of full-file vs. negative only

    Results on demography using real credit files

    • disadvantaged social segment gain greater access than others

      • racial-ethnic minorities

      • young

      • low-income groups

    • Colombian simulations

      • under negative-only, 33% of acceptances women

      • under full-file, 47% are women


    Consequences of full file vs negative only for performance l.jpg
    Consequences of full-file vs. negative-only for performance

    Results on loan portfolio performance

    • default rates climb as information moves from full-file to negative-only in all cases

      • good risks are confused for bad ones

      • bad risks confused for good ones

    • Data sharing

      • improves quality of information for risk provisioning, allowed under Basel II

      • Associated with lower defaults, smaller capital requirements, and lower credit constraints


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    Macroeconomic and macrosocial: growth and equality

    Comprehensive reporting promotes economic growth by enabling an increase in lending to the private sector by as much as 45% of GDP.

    • Statistical tests show that an increase in private sector lending by 30% of GDP can yield:

      • an increase in GDP growth rates of 1%;

      • an increase in productivity growth of 0.75%; and

      • an increase in capital stock growth of 0.75%.

    • An increase in private sector claims by 50% of GDP:

      • lowers the growth of the Gini coefficient (an inequality measure) by at least 0.25%, and more by some estimates.

      • lowers the growth of the percentage of the population living under $1 per day by 2%, and more by some estimates.

      • increases the growth of the lowest (poorest) quintile’s income share by at least 0.45%, and more by some estimates.

    Source: Ross Levine, “Financial Development and Economic Growth: Views and Agenda” Journal of Economic Literature, Vol. 25(June 1997), pp. 688–726; Thorsten Beck, Asli Demirguc-Kunt and Ross Levine, “Finance, Inequality and the Poor.”

    www.econ.brown.edu/fac/Ross_Levine/Publication/Forthcoming/Forth_3RL_Fin%20Inequalily%20Poverty.pdf.


    What you can do l.jpg
    What you can do

    Much work remains to be done, and help is needed. If you are interested you can:

    • Assist in the formulation of standards for APEC, by helping APCC to take local concerns into account;

    • Participate in local and country area outreach efforts, sharing experiences of best practices and methods of engaging press and policymakers; and,

    • Join APCC coalition to may it wider, broader, and more multi-national.


    For more information contact l.jpg

    For more information, contact

    Dr. Michael Turner

    Asia-Pacific Credit Coalition

    100 Europa Drive, Suite 403

    Chapel Hill, NC 27517

    www.apeccredit.org

    Phone: +1 919 338 2798 ext. 802