Client Information Sharing in Bolivia

Abstract

As the microfinance industry becomes more competitive, microfinance institutions (MFIs) increasingly seek access to credit bureaus and credit information agencies. The growing number of microfinance providers in the market results in borrowers having more access to loans, which can lead to client overindebtedness and default. By sharing client information with each other and by using credit bureau information on client history and indebtedness, MFIs facing competition can reduce their credit risk and avoid unnecessary losses. While the growing interest in credit bureaus for microfinance is global, to date, few countries have credit unions and even fewer include microfinance clients in their databases. However, technological advances have lowered the costs of maintaining a large database of information and have made the cost of operating a credit bureau more financially feasible. Credit bureaus are now sprouting up, particularly in Latin America, and microfinance institutions are vying for access to their databases of information. This article presents the case of Bolivia, a country which has experienced extreme competition among microfinance providers, and which is now making efforts to integrate microfinance clients into its credit information system.