Credit Reporting Systems, Credit Risk and Access to Credit: Evidence from European Union Countries

Abstract

The purpose of the article. This paper analyses the impact of credit information exchange systems on banks’ credit risk and the availability of credit in European Union countries. The aim of the study was to assess the relationship between selected characteristics of credit information exchange systems – in particular, the scope of data processed and the level of population coverage by private credit bureaus and public registers – and the quality of banks’ loan portfolios and access to finance (taking into account the cost of bank credit).Methodology. The research covered the banking sectors of European Union countries over 2014–2024. Linear regression was used to examine the relationship between CRS characteristics, non-performing loans (NPLs), and credit availability. Dynamic panel data models were estimated using the GMM-SYS method, while static random-effects models were used to analyse credit spreads. The explanatory variables included credit data completeness, information on consumer income and insolvencies, and population coverage by private and public credit registers. Macroeconomic and sectoral indicators identified through a literature review were used as control variables.Results of the research. Research findings indicate that comprehensive credit information systems, including data on consumer insolvency, are associated with lower credit risk materialization and credit spreads. Broader coverage by private credit bureaus is linked to lower NPL levels and greater access to credit, whereas a greater role for public credit registers is associated with more limited access to finance. The development of CRS systems may also lead to more rigorous borrower selection, reducing the number of borrowers and credit accounts while improving loan portfolio quality. The findings indicate that data completeness is more important for credit market efficiency than the model used to build the information infrastructure. The inclusion of ESG data and BNPL liabilities in credit information is associated with changes in credit availability and pricing, but does not reduce credit risk.