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

Jill Luoto, Craig McIntosh and Bruce Wydick

Economic Development and Cultural Change, 2007, vol. 55, issue 2, pages 313-34

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.

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