How Government should intervene in the financial sector
I have just received a briefing paper from the Deutsches Institut für Entwicklungspolitik / German Development Institute concerning "The potential of pro-market activism as a tool for making finance work for Africa: a political economy perspective". The author argues that: " This suggests that information on creditworthiness is basically a public good, in the sense that it is non-rival in consumption and it is very costly to exclude anyone from using it. When the market fails to let banks appropriate the returns of information about their costumers, banks will under-invest in the acquisition of such information. ..... Credit registries give access to clients’ credit history and increase the transparency of borrower quality, which makes it safer for financial institutions to lend to new customers. ....... The Kenyan Central Bank (CBK) took the initiative and issued a regulation which mandated financial institutions to share information with credit bureaus ." ...