Impact of credit information on the banks stability: Global experience and lessons for Ukraine

Abstract

A quality of the credit portfolio is one of the most important factors of banking system reliability. It is obviously, that there is a direct relationship between this indicator and financial stability of the bank. In turn, the quality of the loan portfolio depends on many factors that are investigated in scientific and educational literature. In this paper, we propose to focus on a group of factors of credit risk that are connected with the availability of information about the borrower. The low efficiency of the national system of collecting information about borrowers in Ukraine in comparison with foreign models was confirmed by the quantitative analysis. This tendency cases the high level of credit risks and low financial stability level of domestic banks. It is necessary to make active efforts on improving the effectiveness of credit bureaus in Ukraine by establishing public credit registry and also to focus on solving other problems associated with the collection and use of information about borrowers.