Without a national system to track identity, lenders in developing nations are challenged by identity fraud, rendering the establishment of credit bureaus near impossible.
Biometric technology such as using computers to track identity with fingerprints may be a possible solution. Xavier Giné, Jessica Goldberg, and Dean Yang’s research explores the use of fingerprinting in Malawi as a method of repayment tracking and loan enforcement. Check out the study summary here.
Commentary on this research by Raymond Anderson, discussant at the 2010 Microfinance Impact and Innovation Conference and author of “The Credit Scoring Toolkit,” can be found here.