The Credit Information Systems in the Service of Improving Credit Market in Albania

Credit information systems, CISs provide information to potential lenders in connection with the applicant's credit record, producing a "credit report", which contains details of payment and credit history of an individual, financial accounts and how they are managed as and other information of interest to the credit industry [Ferretti (2006)].CISs reports help banks in the banking sector borrowers with misbehavior reflected from credit reports that are subject to strict terms and conditions. This is expected to help banks minimize the growth of non-performing loans whose number has a tendency to increase. Information credit sharing for borrowers is expected to minimize the problem of information asymmetry in the financial sector. The information asymmetry between banks and borrowers is one of the main contributors to the high cost of credit. In these situations banks tend to charge a risk premium for the borrower due to lack of client information. This in turn, increases the cost of borrowing, which means acceleration of repayment of loans, translating into a higher level of default. The exchange of credit information, CISs is expected to facilitate the development of capital information to reduce information asymmetry or symmetry of information increase, reaching that credit costs fall sharply. Therefore, the Central Bank's expectation that the increase in the savings gained from the exchange of credit information translates into a lower cost of credit. CISs assists lenders in credit decisions more accurate and in a shorter time. CISs collects and distributes manages customer information for lenders in the form of credit reports. These credit reports will help lenders decide whether decisions to extend credit to an applicant, an overdraft on credit cards or any other product expansion which it is always the customer's ability to repay the loan on time