Panama: Reforming the credit bureau law

Author: Rita Ramalho
Publication: Celebrating Reforms 2007
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Many of Panama’s 300,000 small and medium businesses—employing 68% of workers in the country—were cut off from loans under previous credit bureau regulations. And more than 40% of Panamanian adults, mostly the poorest, had no formal credit options. This was in spite of Panama’s advanced financial markets.

But an ambitious reform of Panama’s credit bureau law passed in 2006 is making credit is more accessible for citizens and businesses. This case study looks at how Panama managed to pass the 2006 law allowing more credit information to be gathered—and allowing more potential entrepreneurs to build credit histories.

Main Findings

  • Panama’s new credit bureau law improved the depth of the credit information system, the quality of the data in credit databases, and the accuracy of the risk analyses.
  • Specifically, for example, the new law allowed entrepreneurs and smaller enterprises to request the addition of information on utility payments to their file, helping them build a credit history to raise their chances of getting formal credit.
  • The law also empowered consumers by requiring that credit bureaus provide them with free and unlimited access to credit reports and allow inserted explanations or complaints about negative incidents on these reports.