Access to Credit Indicator


This indicator measures the depth of available credit information and the effectiveness of collateral and bankruptcy laws in facilitating lending.

Relationship to Growth & Poverty Reduction

The ability to access affordable credit is a critical element of private sector led growth, particularly for small businesses that often lack the initial capital needed to grow and expand and also for agricultural households, where expenditures on inputs precede the returns from harvest; it also increases a business or household’s ability to bear and cope with risk. 1 Visible credit information registries are vital because with credit information sharing, lenders are more aware of borrowers’ capacity and ability to repay their loans, which can significantly decrease default rates, lowering the perceived risk of lending and cost of capital; the registries can also lead to greater inclusiveness of low-income borrowers due to efficiency gains on the part of the lenders via the lowered default rates. 2 Additionally, collateral laws that permit a broad definition of collateral help to eliminate “dead capital,” which can help reduce interest rates and encourage greater loan volumes. 3


The Access to Credit composite indicator is calculated by taking the simple average of two IFC indicators, which have been normalized and ranked on equivalent scales:

  • Depth of Information: The depth of credit information index measures rules and practices affecting the coverage, scope and accessibility of credit information available through either a public credit registry or a private credit bureau. A score of 1 is assigned for each of the following 8 features of the public credit registry or private credit bureau (or both):
    • Both positive credit information (for example, outstanding loan amounts and pattern of on-time repayments) and negative information (for example, late payments, number and amount of defaults and bankruptcies) are distributed.
    • Data on both firms and individuals are distributed.
    • Data from retailers and utility companies as well as financial institutions are distributed.
    • More than 2 years of historical data are distributed. Credit registries and bureaus that erase data on defaults as soon as they are repaid obtain a score of 0 for this indicator.
    • Data on loan amounts below 1% of income per capita are distributed. Note that a credit registry or bureau must have a minimum coverage of 1% of the adult population to score a 1 on this indicator.
    • By law, borrowers have the right to access their data in the largest credit registry or bureau in the economy.
    • Can banks and financial institutions access the credit information online?
    • Does the credit information system provide credit score and make it available to all service subscribers?

    The index ranges from 0 to 8, with higher values indicating the availability of more credit information, from either a public credit registry or a private credit bureau, to facilitate lending decisions. If the credit registry or bureau is not operational or has coverage of less than 0.1% of the adult population, the score on the depth of credit information index is 0.

    • Strength of Legal Rights: This component measures the extent to which bankruptcy and collateral laws protect the rights of borrowers and lenders to facilitate lending. It contains 12 aspects related to legal rights in collateral law or bankruptcy law. A score of 1 is assigned for each of the following features of the laws:
      • Any business may use movable assets as collateral while keeping possession of the assets, and any financial institution may accept such assets as collateral.
      • The law allows a business to grant a nonpossessory security right in a single category of movable assets (such as accounts receivable or inventory), without requiring a specific description of the collateral.
      • The law allows a business to grant a nonpossessory security right in substantially all its movable assets, without requiring a specific description of the collateral.
      • A security right may extend to future or after-acquired assets and may extend automatically to the products, proceeds or replacements of the original assets.
      • A general description of debts and obligations is permitted in the collateral agreements and in registration documents: all types of debts and obligations can be secured between the parties, and the collateral agreement can include a maximum amount for which the assets are encumbered.
      • A collateral registry or registration institution is in operation, unified geographically and by asset type, with an electronic database indexed by debtors’ names.
      • Secured creditors are paid first (for example, before general tax claims and employee claims) when a debtor defaults outside an insolvency procedure.
      • Secured creditors are paid first (for example, before general tax claims and employee claims) when a business is liquidated.
      • Secured creditors are not subject to an automatic stay or moratorium on enforcement procedures when a debtor enters a court-supervised reorganization procedure.
      • The law allows parties to agree in a collateral agreement that the lender may enforce its security right out of court.
      • Does the economy have an integrated/unified legal framework for secured transactions?
      • Is the collateral registry a notice based registry? Does the collateral registry count with modern features (such as an online search?)

    The index ranges from 0 to 12, with higher scores indicating that collateral and bankruptcy laws are better designed to expand access to credit.


    • 1. Beck, Thorsten and Asli Demirgüç-Kunt. 2006. Small and medium-size enterprises: Access to finance as a growth constraint. Journal of Banking & Finance, 30(11): 2931-2943. Beck, Thorsten, Asli Demirgüç-Kunt, and María Soledad Martínez Pería. 2008. Bank Financing for SMEs around the World: Drivers Obstacles, Business Models, and Lending Practices. Washington, D.C.: The World Bank. Demirgüç-Kunt, Asli, Thorsten Beck, and Patrick Honohan. 2008. Chapter 2: Firms’ Access to Finance: Entry, Growth, and Productivity from Finance for All? Policies and Pitfalls in Expanding Access. Washington, D.C.: The World Bank. Diagne, Aliou, and Manfred Zeller. 2001. Access to Credit and Its Impact on Welfare in Malawi. Research Report 116. Washington, D.C.: International Food Policy Research Institute. Diagne, Aliou, Manfred Zeller, and Manohar Sharma. 2000. Empirical Measurements of Households’ Access to Credit and Credit Constraints in Developing Countries: Methodological Issues and Evidence. Food Consumption and Nutrition Division Working Paper No. 90. Washington, D.C.: International Food Policy Research Institute. Schiffer, Mirjam and Beatrice Weder. 2001. Firm Size and the Business Environment: Worldwide Survey Results. Washington, D.C.: The World Bank. Zeller, Manfred, Gertrud Schrieder, Joachim von Braun, and Franz Heidhues. 1997. Rural finance for food security for the poor: Implications for research and policy. Food Policy Review No. 4. Washington, D.C.: International Food Policy Research Institute.
    • 2. Bustelo, Frederic. 2009 Finance for all: integrating microfinance to credit information sharing in Bolivia. Celebrating Reforms 2009, International Finance Corporation. Luoto, Jill, Craig McIntosh, and Bruce Wydick. 2007. Credit Information Systems in Less Developed Countries: A Test with Microfinance in Guatemala. Economic Development and Cultural Change, 55(2): 313-334. McIntosh, Craig, and Bruce Wydick. 2004. A decomposition of incentive and screening effects in credit market information systems. Working paper, Department of Economics, University of California, San Diego, School of International Relations and Pacific Studies, and University of San Francisco. De Janvry, Alain, Craig McIntosh, Elisabeth Sadoulet. 2010. The supply- and demand-side impacts of credit marke information. Journal of Development Economics, 93(2): 173-188. McIntosh, Craig and Bruce Wydick. 2005. Competition and microfinance. Journal of Development Economics, 78(2): 271-298. Padilla, Jorge A., and Marco Pagano. 2000. Sharing default information as a borrower discipline device. European Economic Review, 44(10): 1951–80. Powell, Andrew, Nataliya Mylenko, Margaret Miller, and Giovanni Majnoni. 2004. Improving credit information, bank regulation, and supervision: On the role and design of public credit registries. World Bank Policy Research Working Paper No. 3443. Washington, D.C.: The World Bank.
    • 3. Fleisig, Heywood, Mehnaz Safavian, and Nuria de la Peña. 2006. Reforming Collateral Laws to Expand Access to Credit. Washington, D.C.: The World Bank. Safavian, Mehnaz, Heywood Fleisig, and Jevgenijs Steinbucks. 2006. Unlocking dead capital: How reforming collateral laws improves access to finance. Public Policy for the Private Sector series. Washington, D.C.: The World Bank. Fleisig, Heywood. 1996. Secured transactions: The power of collateral. Finance & Development, 33(2): 44-47.