[35]
Chart 7. Credit registry coverage and NPLs to gross loans
54
in Azerbaijan.
Let us define the link between the credit registry in the Azerbaijani economy
and % of NPLs in the economy on the relevant indicators:
r=
??????(∑ ????????????)−(∑ ??????)(∑ ??????)
√[?????? ∑ ??????
2
− (∑ ??????)
2
]√[?????? ∑ ??????
2
− (∑ ??????)
2
]
.................................................................. (1)
Here,
r – correlation;
x – credit registry coverage;
y – non-performing loans;
n – number of periods (here – 5 years).
Based upon the indicators from Chart 7 we calculated that r=-0.6. It gives
ground to articulate that expansion of the credit registry coverage causes drops in
the share of NPLs in the economy.
Similar estimations are possible on the countries that have credit bureaus,
rather than credit registries in their economies. Let us exemplify the Kazakhstan
and Georgian economies:
54
Source: the Doing Business report and the World Bank
7
15.6
17.7
23
28.7
6
5.68
4.49
4.38
5.25
2011
2012
2013
2014
2015
Credit registry coverage, % of adults
Bank NPLs to gross loans, %
[36]
Chart 8. Credit bureau coverage and NPLs to gross loans in Kazakhstan
55
.
Chart 9. Credit bureau coverage and NPLs to gross loans in
Georgia
56
.
Estimations on the Kazakhstan and Georgian economies (Charts 8 and 9) by
means of equation (1) revealed that relevant correlation was r=-0.9 (absolute
negative correlation), i.e. the wider credit bureau coverage, the less is the share of
NPLs in the economy. To note, relevant correlation is not always negative since
the spectrum of services by credit bureaus and data suppliers vary across countries.
For instance, in estimations on the Russian Federation r=0.5, which means that
55
Source: the Doing Business report and the World Bank
56
Source: the Doing Business report and the World Bank
29.9
37.6
39.3
45.6
51.7
20.7
19.4
19.5
12.4
8.0
2011
2012
2013
2014
2015
Credit bureau coverage, % of adults
Bank NPLs to gross loans,%
16.4
29.6
35.5
46.1
56.8
4.5
3.7
3.0
3.0
2.7
2011
2012
2013
2014
2015
Credit bureau coverage, % of adults
Bank NPLs to gross loans,%
[37]
availability of credit bureaus contradicts to the theses about their benefits to the
economy. We consider that the reason why this indicator is positive in particular
countries needs to be investigated.
The credit reporting system in Azerbaijan has witnessed considerable
reforms for development over the past period. The Law on Credit Bureaus took
effect on 7 December 2016, determining the normative – legal frame for credit
bureaus in the country. One thing that calls for special attention in the Law is the
provision on one-off and unchargeable transfer of the data currently available in
the credit registry to the first licensed credit bureau. We consider that this fact will
be favorable for the investors interested in formation of a credit bureau
infrastructure in the country. Hence, data – crucial raw material for effective credit
reporting will be obtained without any hindrances and excess cost allowing any
startup company to instantly ‘dive’ to the market and operate actively. Moreover,
our understanding is that credit bureau operators should focus on leasing.
Unfortunately, no any official statistics is available on leasing activities in
Azerbaijan. However, independent experts estimated that the size of leasing deals
across the country amounted to AZN 200 million in 2014 (0.5% of GDP for the
same period). To compare, the indicator in question ranges between 2 – 6% in
developed countries
57
.
Evidence from development of
payment systems
Ongoing development of payment systems in Azerbaijan has always been on
the agenda as a priority issue. The government took a number of significant
relevant institutional actions, adopted state programs, and outlined future targets of
payment systems in nationwide strategic development targets (the ‘Azerbaijan
2020: The Vision of the Future’ concept, Strategic Roadmap on Development of
Financial Services in the Republic of Azerbaijan, Strategic Roadmap on
Development of Telecommunication and Information Technologies in the
Republic of Azerbaijan). Moreover, the key challenge for the relevant area is the
57
Source: Ministry of Economy of the Republic of Azerbaijan.