Loan growth and improved asset quality.
This is the result of the introduction of a credit reporting system in Malaysia called Central Credit Reference Information System.
Bank Negara Malaysia assistant governor Marzunisham Omar said since the inception of CCRIS in 2001, loan outstanding grew at an annual average rate of 8.9 per cent while the overall impairment ratio showed a significant decline from its peak of 16.2 per cent in 2001 to 2.2 per cent currently.
He said the sharing of credit information, via the CCRIS, which enables real time access to both positive and negative credit information on borrowers in the banking system, reduces asymmetries of information and search costs thus enhancing access to financing to a broader spectrum of the population.
It also allows for more effective risk-based pricing, which could lower the cost of financing for borrowers with good credit background and history.
Marzunisham said another example of a good credit information infrastructure was the Credit Bureau Malaysia, which was established to assist small and medium enterprises build credible credit records from transactions outside the regulated banking system such as transactions with suppliers and utility companies.
The CBM also has a comprehensive credit scoring methodology which helps banking institutions assess the credit worthiness of potential customers.
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