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Market Brief - Africa Economic Financial Brief 18-22 November 2013
Access to finance is a major challenge, especially in emerging and developing economies. A key factor behind the persistence of this problem is the information asymmetry between lenders and borrowers that encourages adverse selection and moral hazard. To address this information asymmetry, credit registries and bureaus have been established around the world to serve as information brokers. The reduction of information asymmetry has positive implications for relaxing credit constraints, increasing competition in the credit market and efficient allocation of capital. The use of credit registries and bureaus has become ubiquitous in some African countries. Examples include: Swaziland, Botswana and South Africa.