تجزیه و تحلیل اقتصادی از انحصار اطلاعات اعتباری چین

The Chinese government is building the largest public credit information database on earth. The Credit Registry Center of the People's Bank of China registers more than 600 million consumers of which 110 million have a credit relationship with a financial institution. The Center is a public utility monopoly which collects information from banks and non-bank institutions — a unique approach developed in China only recently. In other countries, public credit registers and private credit bureaus co-exist, where the latter are in competition with one another. This article provides the first analysis of the Chinese Credit Registry Center. First, I discuss the development of lending to households, because consumer and mortgage markets came into existence only recently. Secondly, I describe the institutional set-up of the register and its regulation, here, China is compared to other countries. At this stage, there is only very little data available on the register, such that the economic assessment necessarily remains limited. One important question discussed herein is whether the Chinese monopoly can serve as an example for other developing and transformation countries that are currently establishing credit reporting systems.

In China, the world's largest public credit register emerges: By March 2008, the Credit Registry Center of the People's Bank of China registered more than 600 million consumers, of which 110 million had an established credit relationship with a bank or other financial institution. In 2007, the database on corporations registered more than 13 million companies of which 5.9 million had an established credit relationship. This registry will have considerable impact on the economic life of the Chinese people, but also on credit market development, banking competition and banking performance. For several reasons, this registry is outstanding: its sheer size, the volumes of daily inquiries, the underlying ‘social credit’ approach, which includes bank and non-bank information on individuals and companies — these features in combination mark its uniqueness. In other countries, especially in Europe, dual systems of public registers and private credit bureaus exist and the latter are in competition with one another. The database is an important and critical component of the Chinese financial system. Yet, so far there has not been a discussion of its institutional set-up, nor an assessment of its possible economic impact. Although it is the largest public credit register on earth, it is virtually unknown in the Western world. One of the reasons might be the lack of information on it. This paper intends to fill this gap. Around the world, more and more credit registries are founded and many developing and transformation countries are confronted with the necessity to choose a market organization for credit reporting. One pressing question, which is discussed herein, is whether private competition should be established or whether a public monopoly is the better route. The Chinese government has chosen the monopoly route for several reasons, probably the most important one being the fast growth rates in lending to households and the increasing risks that come with it. Traditionally, the State-owned Commercial Banks in China (SCBs) lent to corporations. This lending was based to a lesser extent on credit risk assessment and profitability, and to a greater extent on specific political goals. Bank loans provided the primary source of funding of unprofitable companies, resulting in high ratios of non-performing loans in the SCBs. Since 1998, the government has actively supported lending to consumers for consumption and housing purposes to diversify the loan portfolio of banks and to improve their profitability. These measures come in combination with others (such as the establishment of Asset Management Companies) to reduce non-performing loans. Although China's household credit market is still small compared with other transformation countries, it grows at double-digit rates. Credit reporting – the collection and distribution of personal financial information – is an important tool to decrease asymmetric information between creditors and borrowers. Through better monitoring, moral hazard and credit rationing can be mitigated and risk-based pricing can be applied through credit scoring techniques. If interest rates are not fixed, this leads to greater interest rate differentials in the market. The more precise risk assessment improves a bank's portfolio risk management and increases productivity in the banking sector. Credit reporting improves non-performing loan ratios, leads to less losses through write-offs and decreases interest rates for good credit risks. Bad credit risks, however, have to pay a risk premium. In downstream markets, credit reporting has the effect of intensifying competition through raising transparency between the institutions that share information on their customers. The World Bank typically stresses the positive effects of credit reporting, such as increasing access to finance. However, a centralized economic reputation system can come with considerable privacy risks for individuals and even exclusion from services. First, the information reveals not only a consumers' credit risk, but also their willingness to pay. The data can be used by a financial service provider to set personalized contractual terms and shift rents to the detriment of the consumer. Secondly, if risks associated with individuals are perceived as too high, they might be excluded from services altogether (at least until information is expunged). This paper provides the first institutional analysis and economic assessment of the credit information monopoly in China. As such, it only naturally suffers from data availability limitations. For instance, there is the very short period of operation of the registry — its nationwide expansion only started in 2005/2006. Secondly, there is only very limited data disclosed (typically only in speeches of Central Bank officials). However, some preliminary indications of the economic impact can be derived from the People's Bank of China's Corporate Credit Information Database which started to be populated with data in 2000 and has been in trial operation since 2001. Further, on empirical impact, I include other literature on credit reporting systems. Finally, I discuss whether the Chinese monopoly can serve as an example for other developing and transformation countries. The paper is organized as follows: Section 2 discusses the latest trends in the household credit market in China. Section 3 presents the institutional design of the register and its regulation. Here, China is compared to other countries. Section 4 provides an early-stage assessment of the impact of the system on lending and discusses whether it can serve as an example for other countries. Section 5 concludes.

Around the world, more and more developing and transformation countries are searching for good examples for the market organization in credit reporting. In 2006, the World Bank estimated that private credit bureaus or public credit registries existed in well over 100 countries worldwide. However, systems vary enormously from country to country. Countries with small-scale information sharing (such as Cameroon, Mozambique or Rwanda) or absent information sharing (such as Afghanistan or Sierra Leone) typically encounter the question whether a centralized public register should be set up or whether information intermediation should be left to the market forces. Since the PBOC-CRC is an remarkable example of how to organize credit reporting, it is worthwhile to discuss whether it can be an example for other countries. The answer, of course, is not simple. Typically, competition in credit reporting is associated in the literature with increasing specialization, innovation and price competition, but also fragmentation of credit files if financial institution report to several credit bureaus. The latter can be seen as a duplication of ‘infrastructure,’ when several bureaus build up reporting networks. Further, in competitive environments there are strong forces that can lead to an erosion of personal privacy in the absence of data protection regulations: for-profit credit bureaus typically have incentives to bundle and version profiles and to sell them for many different purposes (marketing, employment screening, etc.). If information sharing with credit bureaus is voluntary like in many industrialized countries, a hold-up problem might exist, because banks abstain from sharing information on their good borrowers to not intensify competition. A public monopoly, on the other hand, can circumvent this problem by forcing institutions to share information, which can be the quicker path. Time efficiency is especially important in markets with weak creditor rights and rapidly expanding consumer lending. There is immediate centralization in terms of gaining a ‘monopoly view’ of the borrower, because in a monopoly credit files will be more complete and there is no duplication of infrastructure. Economic theory suggests that monopolies have incentives to set prices above competitive levels, to choose an insufficient level of quality for their output and to invest less in infrastructure and innovation. Some of these points can be mitigated through regulation. For instance, in China, the price is currently set at zero. I have not discussed data quality issues for the simple reason of lack of information. However, there is an incentive for reporting institutions to report high-quality data if dispute settlement mechanisms are strong. In China, disputes can be directly lodged at PBOC which can forward the case to financial institutions. If the monopoly would share its credit data with other private players, competition could emerge in ancillary services such as scoring. However, in China the information is not shared with other private sector institutions. Depending on the type of monopoly, price regulation is necessary. By June 2008, PBOC had not decided whether credit information will be priced in future. In addition, the access rules are important: a credit register can lead to vertical integration of banks, if organized privately and if it is used as collusion device by incumbents for blocking market entry for outsiders. Jappelli and Pagano (2000, p. 19) have made this case for the Mexican Buro de Credito formed by the Mexican banking association. Other companies could not enter the market, because it was impossible to obtain data from the banks: “Essentially the banks have become vertically integrated with a monopolistic credit bureau, with which they have an exclusivity deal.” If outsiders cannot access the bureau, they have strong informational disadvantages. Further, if information is only shared with that bureau, no other credit bureau can enter. In China the public register is open to all banks and financial institutions, including foreign ones. But the access for private credit bureaus is blocked and there are no plans to change this any time soon. Thus, foreign banks can access the register, but they cannot set up their own credit bureau, for example. Maybe the main point of contention of an information monopoly in the market is the high privacy risk associated with such a database. As noted, in 2002 the State Council adopted a report which emphasized the importance of the ‘social credit system.’ The understanding of ‘social credit’ in China is not comparable with the term ‘household credit’ as understood in Western societies. It encompasses much more than just credit: ‘social credit’ denotes the reputation of a person in the society, covering all economic and social activities of individuals. Although it will not be feasibly in the short-run to gain an all-encompassing picture about a consumer, this approach justifies the collection of information across all important economic spheres, ranging from utility payments to telecommunication contracts. Confidentiality and security of information is increasingly seen as a problem in China. Personal data can be misused, stolen, destroyed, data may contain errors or are obsolete. Further, they can always be used for other purposes unrelated to credit, such as marketing. In China, the purposes for which data can be accessed a narrowly defined and include reviewing applications, guarantees, or post-approval risk assessment. The ‘monopoly view’ of a consumer (including telecom and utilities payment records) can have unexpected welfare effects, that the economic literature is only starting to better understand (see Hermalin and Katz, 2006, Kahn and Roberds, 2007, Taylor, 2004 and Wathieu, 2002). One effect is that good risks obtain better prices and terms for credit products and for bad risks (or ‘not-so-good risks’) it is the other way round. Banks can potentially exclude these and other unprofitable clients from their services. For consumers, negative externalities exist in the case of cream-skimming, where banks would exclude persons with payment problems on utility or telecom bills. The risk of such externalities is higher, when all information is centralized in a database and merged. Numbers reported by the PBOC state that in 2004 about 15,000 loan applications (for the amount of 94.1 billion yuan) were rejected based upon the inquiry (2.9% of the loan application volume). Some commercial banks have reported rejection rates of 10%. Regulators should design privacy regulations in a way that negative externalities from information sharing are reduced. The above discussion shows that some of the negative aspects associated with monopolies can be mitigated through regulation of prices, but also of other matters such as the purposes for which information can be used. For policy making in markets with weak creditor rights, rapidly expanding lending and inexperienced borrowers which enter into lending relationships for the first time, the Chinese case is in fact an example to consider. With increasing maturity of the credit market, introducing competition in credit reporting could increase innovation, but it will not lead to lower prices for the industry, if the public monopoly shares data at zero price. Both solutions – private bureaus and public monopoly – can also be combined. Whatever path policy makers in a country choose, it will be of utmost importance to educate consumers on credit reporting and to prevent negative effects that can arise from it by applying enforceable privacy regulations that reduce negative externalities from data collection and distribution.