. . . [M]igrants are 12% less likely to have a loan, although they are no less likely to have applied for one. Since only approximately 13.4% of household heads have applied for loans, these effects are very large and suggest that being a migrant is associated with a dramatic reduction in the likelihood of obtaining a loan when applying for one.The paper studies credit rationing towards migrants within Guatemala.
Strengthening contract enforcement and creditor rights poses challenges. Even in the context of weak enforcement of debt contracts, information sharing among lenders can be used to incentivize borrowers to repay their loans. In 2001, with the support of the World Bank Group, TransUnion opened the first credit bureau in Guatemala. Nonetheless, as of 2009, only approximately 28% of the country’s adult population was covered by the bureau (as reported by the IFC’s Doing Business website). New investments in information sharing infrastructure in other developing countries are being pursued with similar fanfare, but the implementation of these systems remains uneven and challenging. This research suggests that further attention by policymakers should be devoted to the design and implementation of these systems.