INFLUENCING FACTORS ON CREDIT INFORMATION SHARING IN KENYA
Lending is an important element of financial intermediation, which is itself at the heart of an economy’s financial architecture. Research has consistently shown that credit bureaus that share greater amounts and types of information for use by lenders result into increased access to credit, better lending decisions, lower priced credit and fairer distribution of credit. Increases in formal sector lending among the poor have created a need for credit information systems that provide potential lenders both positive and negative data about borrowers. The paper investigates the factors affecting credit information sharing in Kenya. The study evaluated the independent variables of legal and regulatory framework, policy framework, lending policy, information technology/ records management and Governance Structure against credit information sharing as dependent variable. The population under study were the CEOs of licensed Deposit Taking SACCOs within Nairobi County, that were 34 by 31st December, 2012. The sample under study was 24 CEOs. The research design for the study was an exploratory research design while the data for the study was analysed using both descriptive and inferential statistics. The data was analysed using both qualitative and quantitative methods and explanation given in prose. The study was conducted during the month of July 2013. The research findings indicated that legal and regulatory framework; lending policy and governance structure were very significant and positively affected credit information sharing. Information and records management affects Credit Information Sharing positively though the effect was not significant. The study recommends for the establishment of a powerful regulatory authority to enforce data protection legislation and monitor credit information – sharing institutions.Key Words: Credit Information Sharing (CIS), Deposit Taking SACCOs, Asymmetric Information, Moral Hazards, Adverse Selection.
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