Private Initiative in Regulating Financial Discipline

In conjunction with the establishment of the Long Range Credit Bureau (LRC), CARE International conducted a customer satisfaction survey to evaluate the scale of loan delinquency prevention and risk management policies and confirm that the existence of a credit bureau is justifiable. The survey was conducted in Bosnia-Herzegovina and Republic Srpska with sample of 21 microfinance institutions and banks. Found that the LRC Credit Bureau will:

• Eventually be capable of assessing market size and number of loans outstanding in order to determine the market penetration rate;
• Provide critical information about market saturation and overindebtedness;
• Contribute to the decrease in delinquency, the introduction of financial discipline in everyday work and economic efficiency;
• Be a preventive measure for all types of delinquent behaviour with a clear message about the importance of credit history.

The paper concludes that selection of an appropriate credit methodology can impact on delinquency problems but should be linked and enforced by enabling policy frameworks and information transparency.