Credit Information Sharing Mechanisms in Mexico: Evaluation, Perspectives, and Effects on Firms' Access to Bank Credit

This paper describes the evolution, regulation and market structure of various information sharing mechanisms in Mexico.

The paper aims to:

• Provide a review of the theoretical background of information sharing;
• Describe and analyze the Mexican experience in this area;
• Present international experiences;
• Evaluate the effect that information sharing has had on firms' access to credit in Mexico

It states that:

• Sharing mechanisms alleviate the effects of asymmetric information in the credit market;
• The development of the credit market and information sharing mechanisms are closely related;
• In Mexico, information sharing has been limited because of the minor role that credit has played in the economy;
• The fast expansion of credit in the early 1990s, when there was only a limited coverage of the "Public Registry of Credit Information" (PRCI), made clear the need to develop mechanisms to share information;
• The regulation issued afterwards attempted to promote the entry of private credit bureaus;
• However, only one of them, the Credit Bureau (CB), has remained in the market;
• CB is owned by all commercial Mexican banks, and hence, informs them and meets the supply of their demand for reports.

The paper shows that:

• The quality of information that the CB provides is better than it was in the days before the regulation;
• Wider information has resulted in less access to bank credit for small and medium-sized firms.