Federal Reserve Bank of San Francisco

Credit Bureaus in Asia

Author(s): James Kwan

October 2011

Asia Focus

Rising personal income levels and increasingly competitive lending markets have led to rapidly growing consumer credit in Asian economies during the past decade. However, in many cases this expansion of credit outstripped financial institutions’ ability to manage the associated increase in credit risk. The rising number of credit card defaults and subsequent personal bankruptcies in economies including South Korea, Hong Kong, and Taiwan in the early- to mid-2000s demonstrated the need for Asian lending institutions to employ more robust credit risk management tools. Credit bureaus, which collect information about an individual’s credit history and existing financial obligations, have served as one such tool and helped reduce credit risk and the number of defaults and bankruptcies. This Asia Focus report examines the development of credit bureaus in Asia, focusing on their purpose and function, ownership structure, and the scope of information they provide. The report also explores the legal and regulatory environments in which the credit bureaus operate.

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