The Experience of Credit System Establishment
in the International Community
The major developed countries in the world have built up relatively perfect social credit system through their practice of nearly 200 years, which provides beneficial experience to our country in establishing and improving the social credit system.
I. The major pattern of establishing international social credit system
Developed countries have three kinds of patterns for the establishment of social credit system. One is the pattern with the United States as a representative. Another is the pattern with countries from Europe continent as a representative. And the last is the pattern with Japan as a representative.
a、The American pattern—the United States of America is a country which hold the highest credit transaction volume in the world. The pattern of its social credit system is market-oriented. All the credit services provided by private institutes are its main characteristic. In this social credit system, government is only in charge of credit administration, legislation and supervision. The structure of the system includes the contents as follows.
1. To enact related laws and regulations is a foundation for the healthy growth of a credit industry. Since the end of 1960s, the United States has further enacted related laws of credit administration based on the primitive credit laws and regulations, and at present, it has become quite a completed framework after continuous upgrade.
2. Credit agency plays an important role in credit system. In USA, a lot of credit agencies specially engage in credit reporting, credit rating, debt collection and credit administration, etc. It avoid the credit risk resulted from the booming credit transaction volume to a large extent.
3. Credit consciousness with stronger market-oriented awareness promotes the development of credit system. In the United States, credit transaction is very popular, enterprises without credit records or with stained records will be hard to survive and develop in their business circles. And a person with bad credit records will be limited during his credit consumption or job application.
4. The American pattern has better administration in credit industry. In spite of government is limited in the credit administration industry, related governmental ministries and courts of the United States still affect credit supervision. Among them, Federal Trade Commission is the chief supervising and managing department for credit administration industry, Ministry of Justice, Office of the Comptroller of the Currency of the Ministry of Finance and the Federal Reserve System play important roles in credit supervision. And some Non-Governmental Organizations such like National Association of Credit Management, Consumer Data Industry Association and American Collection Association are also doing significant work in the field of credit self-administration.
Canada, the United Kingdom and countries from north Europe employ this pattern.
b、The European pattern -- public credit system and private credit system are coexistence. There are some differences between the European pattern and the American pattern on social credit system, mainly reflected in three aspects.
1. “Credit Register System” established by central bank coexists with private credit service institutes.
2. The central bank credit system is a national database which is set up and contributed by the government, directly affiliated to the central bank. It focuses on collecting enterprises and personal credit information, providing related credit information to credit information bureau according to the laws. While private credit service institutes mainly bridge the gap of central credit information.
3. The central bank serves the commercial bank of evading credit risk and takes charge of the supervision. The private credit service institutes satisfy the requirement of social credit service.
France, Germany, Belgium, Austria and Spain employ this pattern.
It has to be mentioned that countries of European Union are enhancing the function of private credit service institutes in order to fill the vacancy of public credit system.
c、The Japanese pattern—Japanese enterprises credit system should be called the membership pattern. They only provide credit information for members. The development of its credit system is very special.
1. From neglected to the indispensable lubricant for economic activity. Credit bureau, which is set up in 1892, is the pioneer of credit enterprises in Japan. After over 100 years of development, Japanese credit market has grown up into a fairly large market. Credit system performs an important adjustment function in maintaining normal operation of national economy. Investigation reports from credit corporations have become an important measuring index for enterprises attracting new customers and offering credit volume. It is a significant project that related governmental ministries make evaluation for the enterprises who participate in government purchase, and also, it is an important criterion for banks to determine a loan.
2. The attitudes of credited enterprises turn from negative to positive. Most of enterprises are alerted, repulsive and resistant at the beginning of credit investigation. Some enterprises even repel investigators out of door or offend them rudely. The entire society behaves distrustfully at that time.
Now-a-days, most of enterprises recognize its function on economy, and regard it as a rule in the economic activity. The attitudes of enterprises turn to carefulness, comprehension and cooperation.
3. From decentralized management to centralized monopoly. At the very beginning of credit industry, lots of enterprises and individuals swarm into this business, qualified or disqualified, bring intense price competition. Along with gradual maturity of the market, oligarchic centralization has become more and more prominent since 1960s. Imperial Data Bank and Tokyo Shoko have shared 60%-70% market volume up to now. Centralized monopoly presents durability and stability. Analysis of the reason, they all possess the intelligence / labor intensive characteristic and information / experience accumulative characteristic. That means it requires large numbers of investigators, analysts, national network and long-term materials from numerous enterprises, etc. It is difficult to be overstepped by general enterprises.
4. From handwork to digital integration. The development of science greatly promotes the growth of credit industry. Computer has helped credit corporations throw off manual operation and calculation since 1960s. Afterwards, it assists them to build up database, to introduce concept of mathematic analysis, to integrated analyze numerous financial reports, to summarize and to forecast repayment capability, to establish assessment model for bankrupt risk and to realize measurable analysis, greatly improving the forecast precision and advancing the prestige for the entire industry.
5. Services from simplified to diversified. The Japanese credit system has already developed into an integrated intelligence industry with product serialized, periodized, further exploited and high value-added instead of the former situation of simply providing credit information.
6. From government subsidized to management unrestricted. Hundred years development of the Imperial Data Bank’s indicates that Japanese government supported credit industry during its developing period, especially in the aspect of financing and assisting bank to perform credit investigation. Today, Japanese credit industry is running on the right rail, it is hard to distinguish the marks left by government. They are more close to agency-client relationship. Government opens up information to the public free of charge and benefits from the service of the industry with expense, such like bankruptcy analysis and business forecast, etc. Government would neither intervene the operation nor enact special laws and regulations on credit legislation. Persons concerned in Japanese credit business circles indicate that unrestricted management will profit credit investigation to be maintained fairly and independently, ensure results objectively and justly and promote a long-term prosperous business.
7. Government becomes more open in releasing information to the public. The degree of publicity is a key point to the development of credit industry. From the point-of-view of increasing society transparency, Japanese government opens up information to the public progressively. Since 2001, especially after the implementation of “Government Information Public Law”, plenty of information has flowed into the society without charge.
8. Foreign capital moves from investing alone to cooperating with local capital. Some giant international corporations planed to enter Japanese market independently according to Japanese enormous credit requirement. But finally they had to drop the plan, because Imperial Data Bank and Tokyo Shoko were strong enough while Japanese society required interpersonal relation. At last, they expanded business in Japan indirectly in the way of entrusting Tokyo Shoko.
9. Business development fluctuates according to the economic prosperity. Analyzing the progress of Japanese credit business, you will find the credit business growth or stagnation along with the economic prosperity. Especially when economy declines, the requirement ascends on the contrary. It sufficiently proves its lubricant function for economic activity, that is to say, the requirement will expand when economy metabolism activates and contract when it is balanced.
Generally speaking, Japanese credit industry has been mature developed, it completely melts in the entire economy, acts an irreplaceable role in the market-oriented economy. But restricted by the national situation, there are some weaknesses still existed in the industry. First, there is a lack of transnational operation aspiration. Second, the network that releases government information is low efficient. Third, banks are not allowed to provide enterprises credit note. This is totally different from the western financial organization. It weakens bank’s function during the period of credit investigation.
d、Some developing countries have dissimilar experience to developed countries during the period of establishing credit system for their own because of the different national situation and different development phases. First, the development of credit industry is a necessary requirement when market-oriented economy grows up to a certain phase and is requested by the financial system reform. Second, central bank performs important function in credit administration. Third, credit agency includes credit information bureau and credit rating enterprise. There among, the establishment of credit rating enterprise aims at enhancing the transparency of capital market (especially the bond market) and promoting their healthy development. The establishment of credit information bureau rather focuses on increasing efficiency of financial system and evading financial risk. Fourth, they pay attention to building up a legal system of credit administration, but did not complete credit legislation. Every country is promoting credit administration legislation at present. And the last, the administration of credit industry abides by certain laws and regulations.
http://www.ciimc.com
Permanent Legal Advisor:Beijing Huicheng Law Firm Director Lawyer:Fan Shiwen Vice Director Lawyer:Zheng Guochen
Add: 6/F,United International Building,No.19 Dongsanhuannan Rd.Beijing,100021 China
Website Management:Network Department of CIIMC Email:info@wedd.org
Tel：+86 10－87665186 Fax：+86 10－87665880/87665881