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

This paper describes the evolution of the various information sharing mechanisms that have emerged in Mexico; it studies their evolution, regulation and market structure. Sharing mechanisms alleviate the effects of asymmetric information in the credit market. It is known that the development of the credit market and information sharing mechanisms are closely related. We show that in Mexico information sharing has been limited because of the relatively minor role credit has played in the economy. The fast expansion of credit in the early 90s, when there was only a limited coverage of 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. This firm is owned by all Mexican commercial banks, and henceforth, it is the recipient of their information and the supply of their demand for reports. It has displaced the PRCI and other potential competitors. Despite this market structure, we show that the quality of the information provided by the CB is better than it was in the days before the regulation. We also show that wider information sharing has resulted in less access to bank credit for small and medium sized firms.