Serving the Underserved: Microcredit As a Pathway to Commercial Banks

A large-scale microcredit expansion program—together with a credit bureau accessible to all lenders—can enable unbanked borrowers to build a credit history, facilitating their transition to commercial banks. Loan-level data from Rwanda show the program improved access to credit and reduced poverty. A sizable share of first-time borrowers switched to commercial banks, which cream-skim less risky borrowers and grant them larger, cheaper, and longer-maturity loans. Switchers have lower default risk than non-switchers and are not riskier than other bank borrowers. Switchers also obtain better loan terms from banks compared with first-time bank borrowers without a credit history.

REGULATORY PROCEDURES OF MICROCREDIT ORGANIZATIONS OF THE EUROPEAN COUNTRIES

The article analyzes the practice of organizing and developing the activities of microcredit organizations, the practice of microcrediting small businesses, the formation of the legal frameworkfor the activities of microcredit organizations in the practice of the European Union.Keywords: microcredit, microfinance, microloan, pawnshop, credit union, credit bureau

Does the Age at Which a Consumer Gets Their First Credit Matter? Credit Bureau Entry Age and First Credit Type Effects on Credit Score

The consumer credit market plays a prominent role in the financial life of U.S. households. Consumers' credit histories and, in particular their credit scores, are key factors that determine their access to credit and the price at which they borrow.

Serving the Underserved: Microcredit as a Pathway to Commercial Banks

A large-scale microcredit expansion program—together with a credit bureau accessible to all lenders—can enable unbanked borrowers to build a credit history, facilitating their transition to commercial banks. Loan-level data from Rwanda show the program improved access to credit and reduced poverty. A sizable share of first-time borrowers switched to commercial banks, which cream-skim less risky borrowers and grant them larger, cheaper, and longer-maturity loans. Switchers have lower default risk than non-switchers and are not riskier than other bank borrowers. Switchers also obtain better loan terms from banks compared with first-time bank borrowers without a credit history.

COMPORTAMIENTO DEL RÉCORD CREDITICIO EN INSTITUCIONES FINANCIERAS EN ÉPOCA DE COVID19

Este artículo aborda el análisis del récord crediticio y su importancia de mantenerlo en excelentes condiciones en época de pandemia por efecto del Covid19. El estudio tiene un enfoque mixto, mediante análisis descriptivo y transversal, con base en un estudio de campo efectuado a una muestra de 250 personas como clientes de las más importantes instituciones financieras de la ciudad de Riobamba (Chimborazo - Ecuador), para exponer y ejemplificar los resultados del diagnóstico, apoyado en revisión bibliográfica-documental. Los resultados revelan que el 74% de los encuestados conocen su récord crediticio, la falta de pago de sus obligaciones en época de pandemia afectarán su historial crediticio pues el 82% lo afirman y el 70% de los encuestados confirman que es importante tener un excelente récord crediticio. Se concluye por tanto que es importante disponer de un excelente récord e historial crediticio en las entidades financieras y comerciales, si se desea obtener futuros beneficios crediticios, para sus actividades empresariales y personales.Palabras clave: Récord crediticio, central de riesgos, buró de crédito, créditos, covid19, pandemia. AbstractThis article addresses the analysis of the credit record and its importance of keeping it in excellent condition in times of a pandemic due to Covid19. The study has a mixed approach, through descriptive and cross-sectional analysis, based on a field study carried out on a sample of 250 people as clients of the most important financial institutions in the city of Riobamba (Chimborazo - Ecuador), to expose and exemplify the results of the diagnosis, supported by bibliographic-documentary review. The results reveal that 74% of respondents know their credit record, failure to pay their obligations in times of a pandemic will affect their credit history as 82% affirm it and 70% of respondents confirm that it is important to have an excellent credit record. It is therefore concluded that it is important to have an excellent record and credit history in financial and commercial entities, if you want to obtain future credit benefits for your business and personal activities.Key word: Credit record, risk center, credit bureau, credits, covid19, pandemic

Credit Risk Aversion Model During Economic Downturns and Recovery

Credit defaulting in the financial sector is a worldwide delinquency that has become a nightmare for this sector. The search for a solution to root out this problem remains a big challenge for academics, the financial sectors, and the governments. For instance, per the American Bankers Association's (ABC) Consumer Credit Delinquency Bulletin, unserviced bank cards plunged two basis points to 2.96% of all accounts between July-August 2019. This value remained below the 15-year average of 3.68%. (Per ABC, delinquency is a late payment that is 30 days or more overdue.) Though these terrifying statistics sounds like good news, the Trans Union's Industry Insights Report found that the unserviced credit card rate reached 1.81% in the third quarter of 2019, rising from 1.71% for the third quarter of 2018. These figures from the credit bureau are based on accounts that are 90 days or more overdue.

Strategic Default Among Private Student Loan Debtors: Evidence from Bankruptcy Reform

Bankruptcy reform in 2005 restricted debtors’ ability to discharge private student loan debt. The reform was motivated by the perceived incentive of some borrowers to file for bankruptcy under Chapter 7 even if they had, or expected to have, sufficient income to service their debt. Using a nationally representative sample of millions of anonymized credit bureau files, we examine whether private student loan borrowers distinctly adjusted their Chapter 7 bankruptcy filing behavior after the reform. We do not find evidence to indicate that the moral hazard associated with dischargeability appreciably affected the behavior of private student loan debtors prior to the policy. Thus, our findings do not provide empirical support to the theoretical concerns about pervasive strategic default that inspired lawmakers to make private student loan debt largely nondischargeable.