Source: Banker Author: Ping Sijian 2016-03-18
SMEs are extremely important to the national economy and can even be said to be one of the pillars of national economies. However, due to its limitations, SMEs are always faced with financing difficulties caused by information asymmetry. On the one hand, there is an information gap between SMEs and financial institutions, which leads to an overestimation of the risk premium of SME loans. On the other hand, banks and other borrowers are reluctant to lend to SMEs for risk aversion. In response, various governments have introduced various policy measures to promote the financing of SMEs. In addition to financial subsidies and other direct assistance to corporate finance, another common practice is to reduce the information asymmetry between SMEs and lending institutions and solve the problem of overestimation of risk premium through various credit reporting systems. At present, there are three different systems in the world: one is a market-based credit service company, such as D&B in the United States, Imperial Data Bank in Japan, etc.; the second is a government-led credit bureau, such as a small and medium-sized enterprise in Malaysia. The Credit Information Bureau (SMECB); the third is the industry association database, such as the Japan SME Credit Risk Database (CRD). In this paper, Japan's Imperial Data Bank, SMECB and CRD are taken as examples to represent the above three SME credit reporting systems, analyze the three modes of operation, data collection and services provided, and compare their similarities and differences. Finally, some references and inspirations about the development of China's SME credit reporting system are drawn from it.
Providing SME credit information by commercial credit service companies is one of the traditional credit bureau systems. This kind of system appeared earlier and developed relatively well. Western countries with relatively mature capital market development, such as the United States, generally adopt this system for corporate credit reporting.
Japan also has a credit mechanism for such market-oriented operations. Japanese corporate credit was monopolized by two of the country's largest commercial credit bureaus, mdash;— Imperial Data Bank and Tokyo Chamber of Commerce. Among them, Imperial Data Bank (TDB), founded in 1899, has accumulated a huge amount of data under long-term management. Like other commercial credit information companies, TDB sets up branches, hires professional field researchers, collects corporate information, establishes databases, conducts industry research and analysis, and provides database services, risk assessment and consulting services to customers, and collects services. Cost, to achieve profitability. The historical record of bankruptcy or default of the company provides a very important role in objectively judging the credit status of the enterprise.
It is one of the characteristics of TDB to directly collect a large amount of first-hand data by means of branches and a large number of professional employees covering the whole country. It is also one of the characteristics of the Business Credit Bureau which is different from the other two credit systems. Imperial Data Bank has 83 research institutes across Japan, employing more than 1,700 researchers in the professional field, collecting financial data through daily research activities or monthly questionnaires to thousands of companies, and through regular credit investigations. Research, collect information on corporate bankruptcy and defaults, and publish corporate bankruptcy reports on a regular basis. In this way, TDB has accumulated a large amount of data, and has established COSMOS, Asia's largest commercial enterprise information database, which contains data and history of about 4,000 listed companies and 230 million non-listed companies. Not only that, TDB also set up branches in overseas regions such as the United States, Europe and South Korea, which allows it to further improve the database, not only collect data from foreign companies, but also collect data on the overseas business of domestic companies.
TDB adheres to the principle of “recognition and unique neutrality” in the data collection process. “The principle of “currently recognized” (Visit and Confirm) means that Imperial Data Bank insists on sending professional researchers to relevant companies for on-site investigation, data verification and data collection. Although adhering to such principles requires high costs, it also makes TDB's credit reports highly credible and enjoys a high reputation among customers. The “only” principle is that TDB assigns each company a unique enterprise code based on accurate statistics. Due to the reliability of TDB data and research, this code becomes the standard identifier for many companies or organizations for customer data management and online transactions. The “Neutral” principle means that TDB always maintains an objective and neutral attitude in the process of collecting and processing analytical data.
Services provided by TDB include database services, credit risk research services and market research services. According to the needs of customers, TDB will extract 18 types of data including the headquarters address and the number of employees from the database, and generate relevant reports to help customers understand the credit level of related companies and reduce risks. In addition to providing database services, TDB also provides credit risk research services. With a large amount of historical data and research experience accumulated by long-term operations, TDB will conduct credit risk research on specific companies according to customer requirements, providing credit research including basic information, historical records, corporate performance, management, banking transactions and future prospects. Reports to help customers reduce risk. In addition, TDB will regularly publish economic market analysis reports, and customize the analysis reports according to customer needs to help customers further manage risks.
The traditional credit bureau system, in addition to the above-mentioned commercial credit reporting company, has an institutional form —— a government-issued credit bureau. In this respect, Malaysia's construction is relatively complete. In addition to the central bank's establishment of the public credit database CCRIS, the Malaysian Credit Guarantee Corporation of the central bank has also established the Malaysian SME Credit Bureau (SMECB), in the World Bank report in Malaysia. The information depth index reached a maximum of 6 points, and credit availability ranked first in the world. SMECB was established on June 3, 2008 and officially opened on July 1. In order to better provide comprehensive and credible SME credit and rating information and foster a good credit culture environment, SMEBC cooperates with D&B Group and Bank of Malaysia Association to form a strategic cooperation. The ownership structure between the three is shown in Figure 1. Credit guarantee companies occupy more than 70% of the shares and dominate the credit bureau.
The operating mode of SMECB. The main operating mode of SMECB is simply to obtain credit information of SMEs from its creditors, form a centralized database, and evaluate the credit value and financial health of SMEs based on the data in the database to form an independent credit rating report. The specific operation mode is shown in Figure 2.
Data collection. SMECB mainly obtains SME data from three channels: one is the Public Credit Information Database (CCRIS) of the Central Bank of Malaysia; the other is the cheque information provided by the central bank; the third is the non-bank corporate credit information voluntarily provided by the enterprise. . The credit bureau will obtain data including important financial data and historical default records from these three sources and other sources of information, integrate them into the database, and provide customized credit evaluation reports to users. Independent credit rating. The service users of the Credit Bureau mainly include financial institutions, multinational corporations, and government agencies. Of the 500,000 SMEs in the country, 265,000 are SMECB users.
The services provided. The services provided by SMECB include: (1) Credit risk reporting. Generate risk credit analysis reports for specific companies based on customer requirements, including financial data, historical default records, and risk assessments. In addition, SMECB has established a blacklist system to blacklist over-risk companies to help customers quickly identify the risk level of their target companies. (2) Business information report. Help B2B companies, retail banks and other companies analyze market conditions, optimize business processes and enhance risk management processes based on data from the Malaysian Association of Companies. (3) Credit score. Calculate the default rate of the target company in the next 12 months.
Unlike the two traditional credit bureau systems mentioned above, CRD is a membership database provided by non-profit industry associations. The day-to-day operations mainly rely on membership dues. The CRD Management Committee was established in March 2001 with only 58 members. In April 2005, the CRD Management Committee was renamed the CRD Association and was corporatized.
The operating mechanism of CRD. Member institutions provide relevant data to the CRD Association, and these data are filtered and integrated and stored in the CRD database. The CRD Association builds a scoring model based on the vast data in the CRD and regularly revise it. The CRD Association provides these scoring models to its member institutions, enabling member institutions to accurately rate SME customers to determine rates. At the same time, CRD will provide other services to its members, including financial data indexing and consulting services. Figure 3 is a simplified CRD mode of operation.
The CRD Association (CRD Association) is responsible for the operation and maintenance of the Japanese SME Credit Risk Database (CRD). Members of the Credit Risk Database Association (CRD Association) include nationwide credit guarantee agencies, financial institutions, and a number of other companies. At the time of the initial establishment of the association in 2001, the number of members was 58. By August 2015, the number of members had reached 180. Table 1 shows the composition of the members of the CRD Association.
Data collection. The member institutions of the CRD Association are the main source of data for CRD. The data that member institutions need to submit to the CRD include 63 financial indicators in the balance sheet and 24 indicators in the income statement. At the same time, CRD will also seek some non-financial data from members, such as whether there are inheritors, etc., as well as some default records. After more than ten years of accumulation, CRD has accumulated a large amount of data, with a total of more than 20 million financial data. Unlike the two systems described above, CRD uses anonymity when collecting data from members and SMEs. That is, when submitting the financial form, you do not need to include information such as the company name and creation time. To a certain extent, anonymous collection of information can improve the accuracy of the information.
The services provided. The services provided by CRD can be summarized into three categories: one is the scoring model, the other is the sample data, and the third is the consulting service. The scoring service is an important service provided by CRD for member financial institutions. It can be said that the scoring model is one of the major features of CRD that distinguishes it from the above two types of credit bureaus. CRD does not directly provide financial data for a particular company, or directly conduct a risk assessment of the target company. Instead, an accurate scoring model is provided to member institutions, which then use these models to score their customers. It can be said that the accuracy of the scoring model is the key to the success of CRD. This series of risk scoring models is based on the huge data accumulated by the CRD. In addition to providing a full scoring model to member institutions, CRD provides a subroutine service that provides subroutines for the CRD scoring model for members to refine their own scoring system.
CRD will also provide data services to its members. CRD will provide member institutions with financial data and other statistical information of SMEs according to industry, region and other standards according to the requirements of the members. For example, the number of SMEs in a region, the mean and variance of a financial indicator, to help member institutions improve their own internal rating system.
The CRD Association also provides a range of consulting services to member institutions, including the Management Consulting Support System (MCS). The MCS is used to diagnose the financial situation of SMEs and to estimate the financial situation of the target company by comparing it with more than one million SMEs recorded in the CRD. Second, CRD also provides other consulting services, such as enterprise risk management training services.
As mentioned above, the traditional credit bureau system and the SRD credit risk database CRD provided by industry associations with Japanese characteristics have similarities and differences in terms of data collection, service provision and system design. For the analysis of the examples of the three systems mentioned above, the comparison between the three systems is shown in Table 2.
Anonymous and real-name systems. Anonymity can be said to be the most significant feature of CRD that distinguishes it from the other two traditional credit bureau systems. The Commercial Credit Bureau, which is an example of Imperial Data Bank, insists on the principle of “recognized on the spot”. In order to ensure the authenticity of the data, professionals will be hired to conduct an exclusive interview with relevant companies. SMECB, on the other hand, obtains authoritative data and records from official sources. In the process, the real name principle is also adopted, and the company name is not hidden. The anonymity system has certain advantages compared with the real name system, and it also has certain disadvantages. Compared to real-name collection of information, it is more likely to collect information anonymously and obtain real and accurate data, because companies have less chance of falsifying when submitting data. At the same time, however, the increase in anonymity makes post-screening and integration of data difficult, and data screening and integration is an important step in ensuring the quality of CRD data. In the trade-off between the two, the CRD Association will cryptographically collect the collected information while maintaining the project attributes to a minimum.
The degree of constraint on the borrower is different. The difference between anonymous data collection and real-name collection, in addition to the accuracy of the data, also leads to other differences between the three systems, such as the degree of constraint between the provision of services and the borrower.
First, the anonymity system makes the information provided by the CRD about the average data of a group of companies with the same characteristics or at the same risk level. The data is based on the current operational performance of the company to predict the future behavior of the company. The traditional credit bureau system is different. The data they provide shows the situation of a specific company and the past default record of the company. The difference between the two is that CRD focuses on the average data and the future behavior of the company, while the traditional credit bureau focuses more on the historical data of specific enterprises.
Secondly, the traditional credit bureau system can impose a direct and strict constraint on SMEs. On the one hand, the credit bureau provides data and historical records for a specific enterprise. On the other hand, these institutions generally adopt a blacklist system. The breach of contract will be recorded by the credit bureau, and the risk will be blacklisted. The combination of the two aspects can directly affect the borrower's reputation or risk rating, and form a direct and strong constraint on the borrower. The CRD can only indirectly affect the borrower, because the CRD only collects data of a group of small and medium-sized enterprises anonymously, and the CRD does not directly give a rating to a certain enterprise. Instead, it provides a scoring model to the member institutions, and the member institutions reuse. These models score customers to determine the appropriate risk premium. CRD will only revise the model based on the collected data, so that companies with default risk may get higher scores when they are evaluated by the model, which is compared with the direct impact of the blacklist system on the success rate of SME loans. In other words, the impact is more indirect and the constraints are smaller.
The difference in system design intent. The many characteristics of the three systems in data processing and products are, in the final analysis, caused by differences in their purpose. Although the ultimate goal of the three systems is to promote the financing of SMEs, the specific ideas are not the same.
The Business Credit Bureau in the traditional credit bureau system promotes SMEs by providing financial institutions with financial information and historical records of SMEs, alleviating information asymmetry between them and helping lending institutions reduce risks. Financing. The design idea of the government-led credit bureau system is to reduce the risk of lending institutions and promote the financing of SMEs. For example, SMEBC will provide users with customized risk reports to help financial institutions such as lending institutions and risk guarantee companies reduce the risk of lending to SMEs.
Unlike the idea of reducing risk to promote financing, CRD establishes a relatively accurate credit risk-related lending rate by providing an effective valuation model to correct for information asymmetry and financial base. The over-estimated risk premium caused by the lack of facilities promotes the financing and development of SMEs. CRD provides a low-cost and fast and easy valuation model to facilitate transaction-based SME financing. These models are extremely useful when the model is extremely expensive to use and the loan amount is not high. At the same time, CRD also provides independent tools to promote SME asset securitization to help SMEs access the capital market. In a sense, CRD is more concerned with the financing convenience of SMEs than reducing non-performing loans.
China started the construction of the credit information system, especially the construction of the credit reporting system for small and medium-sized enterprises. The relevant system is not perfect and there is room for improvement. China currently has a large number of commercial credit bureaus and government-led credit bureaus, such as the SME credit data management system. Through the analysis and comparison of the three traditional credit information systems, some references and inspirations for the construction of China's SME credit information system are obtained.
Accelerate the improvement of relevant laws and regulations. The success stories of the three types of credit reporting systems discussed above, although each have their own advantages and disadvantages, each has its own characteristics, but have one thing in common, that is, they are all built under a relatively complete legal framework. However, China's credit information industry started late, the relevant laws and regulations are still not perfect, and the laws and regulations governing the credit reporting industry are fragmented and fragmented, and there is a lack of more specific laws on the collection, use, disclosure and protection of credit information. Provisions. In addition, the credit rating industry is not covered by the “Regulations on the Administration of Credit Information Industry” and lacks legal norms for the credit rating industry. China should learn from Japan's experience and improve the relevant legislation on credit reporting as soon as possible, such as establishing laws on the privacy protection of enterprise data, clarifying the collection and use of credit information and related legal responsibilities, and incorporating the credit rating agency industry into the legal system. The exit mechanism, clear the regulatory body, and standardize the development of the credit rating industry.
Take the path of proper concentration. With reference to the development experience of the Japan Credit Information Bureau, the initial stage of development was “the hills are everywhere, and the fish are mixed”, and through continuous improvement and regulation of the market system and the continuous merger between enterprises, the oligopolistic market monopolized by Imperial Data Bank and Tokyo Merchants is formed. In contrast, China's credit information market is in the early stage of development, and the number of credit reporting agencies is numerous but the strength is uneven. At present, the People's Bank of China has registered more than 670 credit bureaus, including Deng Bai, Bai Lijun and other four global credit reporting agencies. Most of these institutions are geographically operated and decentralized, and have not yet embarked on the path of large-scale development, which is not conducive to resource integration and experience accumulation. Some institutions even have irregular operations. The state can properly guide this, promote the survival of the fittest, gradually cultivate some brand enterprises, and become bigger and stronger, thus driving the development of the entire industry. In this industry, oligopoly is more conducive to the advantages of the credit bureau to accumulate data and research capabilities, to provide more accurate and better quality services.
Building an advanced scoring model. One of the features of CRD is the successful establishment of an accurate risk scoring model, which can help lending companies measure the risk of loans, correct the overvalued risk premium, determine the appropriate rates, and make it easier for SMEs to obtain loans, not only The number of loans for small businesses with lower risk levels has increased, and companies with higher risks have also been able to obtain loans. When developing the credit information system for SMEs, China should encourage the construction of a modern credit scoring model based on the actual credit records and financial data of a large number of enterprises to predict credit behavior and carry out credit ratings.
(Author: International Finance Research Center, School of Foreign Affairs)
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