Credit Bureaus and Registration and Access to Finance: New Evidence from 42 African Countries

Using new data from 42 African countries, we investigate the effects of public and private credit registries on firms’ access to finance as well as the effect of public credit registries’ design on the severity of the financing constraint. Our results show that access to finance is on average higher in countries with private credit bureaus (PCBs), relative to countries with public credit registries (PCRs) or countries with neither institution. However, there is a significant heterogeneity in access to finance among countries with PCRs as well as the design of these institutions. We find that countries with PCRs that collect positive and negative information on borrowers’ credit histories are associated with firms reporting smaller obstacles in access to finance. Likewise, we show that provision of online credit information is only beneficial when the internet penetration rate in the country is high and that reducing minimum cut-off for loan coverage by PCRs helps soften the financing constraint only when positive and negative information is provided.