Two types of frameworks can facilitate…

Two types of frameworks can facilitate…

Getting Credit

Two types of frameworks can facilitate access to credit and improve its allocation: credit information systems and borrowers and lenders in collateral and bankruptcy laws. Credit information systems enable lenders to view and consider a potential borrower’s financial history (positive or negative) when assessing risk and they allow borrowers to establish a good credit history that will facilitate their access to credit. Sound collateral laws enable businesses to use their assets, especially movable property, as security to generate capital—while strong creditors’ rights have been associated with higher ratios of private sector credit to GDP.

WHAT THE GETTING CREDIT INDICATORS MEASURE?

Strength of legal rights index (0–12)

Rights of borrowers and lenders through collateral laws Protection of secured creditors’ rights through bankruptcy laws.

Depth of credit information index (0–8)

Scope and accessibility of credit information distributed by credit bureaus and credit registries.

Credit bureau coverage (% of adults)

Number of individuals and firms listed in largest credit bureau as percentage of adult population.

Credit registry coverage (% of adults)

Number of individuals and firms listed in credit registry as percentage of adult population.

What are the details?

The getting credit indicators reported here for Iran, Islamic Rep. are based on detailed information collected in that economy. The data on credit information sharing are collected through a survey of a credit registry and/or credit bureau (if one exists). To construct the depth of credit information index, a score of 1 is assigned for each of 8 features of the credit registry or credit bureau (see summary of scoring below).

The data on the legal rights of borrowers and lenders are gathered through a survey of financial lawyers and verified through analysis of laws and regulations as well as public sources of information on collateral and bankruptcy laws. For the strength of legal rights index, a score of 1 is assigned for each of 10 aspects related to legal rights in collateral law and 2 aspects in bankruptcy law.

Source: Doing Business database.

Source: Doing Business database.

Note : An economy receives a score of 1 if there is a “yes” to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0.

Source: Doing Business database.

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