PBOC's effort to share credit and loan data amongst banks is a good start. A BIG problem lies with the chicken / egg syndrome. What comes first?!- - credit data or Chinese people taking out loans?
“97.5 per cent of all consumer loans granted by Chinese banks” are in the system but over 90+% of Chinese citizens has never had a loan or use credit of any type.
In America , there is a New York Jew that wrote a book about fighting in World War 2. It was called Catch-22 . He talked about how young pilots were required to fly 22 missions before they could safely retire. You'd probably die after 22 flights with enemies shooting you out of the sky.
China 's credit system has very little flight experience. After going on “22” flights, there are going to be financial casualties.
American's call this, “Catch 22”. It is used in describing the impossible scenario where A must have been preceded by B , AND B must have been preceded by A . Symbolically, where either A or B must come into being first .
A is China credit data and B is China credit lending
Beating this “catch 22” can be done with data mining and data sharing of China 's Debit Data.
Focus: debit data augments and accentuates credit data . Cell phone pre payments, ATM withdraw patterns, deposit account frequencies, utility bill timeliness of payments, debit card transactions are all examples of debit data.
The transition from existing debit data converted into credit data can be found at
“ China Credit Report System Development Stages ”
Catch 22 Solved.
A supplemental PBOC “Debit Information Report” should be created. This Debit Reporting Agency would sift through the mountain of debit data such as phone payments, internet pre-pay, flight payments, utility payments and added to credit data.
Combined with credit, these two axis (credit data on the y-axis and debit data on the x-axis) combine to form a “hybrid credit –debit” that model credit behavior. Credit data also includes audited, self-populated information such as job, income, education, address, expense obligations, collateral offered, assets owned. These are shown here with the “f” and “epsilon” function.
“ China Credit Bureau Foundation ”
PBOC' commitment to sharing financial data (both credit and debit data), coupled with the cooperation of rural credit co-operatives (RCC) guarantees a great new credit system.