Credit Scoring and Credit Risk

This EIF Working Paper elaborates on the most recent update of the EIF SME Access to Finance (ESAF) Index, a composite indicator used to monitor SME external financing markets in the 28 EU countries. The current update, using latest available data, constitutes the fifth iteration of this exercise. The paper is used to provide some background information underlying the aggregate ESAF results, by analysing its four subindices and their subindicators and focussing on a select number of individual results. 

Digital credit offers enormous promise to enhance provide a valued service to the mass market thus increasing financial inclusion, while also driving uptake and use of digitial financial services (DFS). However, with 2.7 million people already blacklisted on the credit reference bureau in Kenya, concerns are growing about current standards of regulation, customer protection and product design.

As the UK’s near-zero interest rate era comes to an end, small businesses are exposed to rate rises. Marc Bajer, CEO of Hadrian’s Wall Capital, discusses why corporate finance teams in accountancy firms should take note. He says "As the UK’s near-zero interest rate era comes to an end, small businesses are exposed to rate rises. With another Bank of England increase on the horizon, it’s important to understand just how much of a financial toll this will take on SMEs – both for their own financial stability and for the economy as a whole."

Global banks have been limiting correspondent banking relationships (CBRs) with local banks in emerging and developing economies – a practice referred to as “de-risking.”  A new World Bank report – The Decline in Access to Correspondent Banking Services in Emerging Markets: Trends, Impacts and Solutions – examines what effect this trend has had on developing countries. The report is based on eight countries in Latin America, sub-Saharan Africa, East Asia and South Asia.

The ABA survey was conducted to review the digital lending landscape, specifically to gauge member interest in two different types of business models:

In Sub-Saharan Africa as elsewhere, Micro, Small and Medium Enterprises (MSMEs) play a crucial role in economic development and job creation. However, because of a general lack of knowledge about this particular segment, the sector hardly achieves its full potential. In order to better meet MSMEs’ needs, a first step consists in identifying the profiles, growth paths, success factors and challenges faced by those who managed to turn their microenterprises into small or medium entities, referred to as Small and Growing Business (SGB) owners.

The rapid growth of social networks and e-commerce platforms has transformed the way people communicate and transact around the world. Integrating digital payments into these growing networks and platforms has presented vast opportunities to drive economic opportunity, financial inclusion, transparency, security and growth. In practically all countries individuals, businesses and policy-makers are recognizing these opportunities and acting on them, but perhaps nowhere more so than in China.