Role of the Credit Risk Database in SME Financing

Asymmetric information makes it difficult for small and medium enterprises (SMEs) to raise funds. In order to reduce the asymmetry of information, a framework for sharing credit risk information will be useful. Currently, sharing credit risk information on individual SMEs has been made available by credit bureaus and credit-rating firms. However, in the future, such information will not be adequate for achieving more diversified and efficient relationship and transaction-based lending. It is necessary to establish a common benchmark in the form of a credit risk index of average SMEs based on a large-scale credit risk database. Because such a credit risk database would be a public good in the information infrastructure, collaboration between the private and public sectors would be desirable.