| Abstract: | In many regions of the globe today outside the US and Canada, existing networks for evaluating borrowers' credit histories, for recording borrowers' pledges of assets backing loans, and for the legal enforcement of creditor claims are often poorly developed. Inside North America these problems with credit information flows and legal enforcement systems are most evident inside Mexico, where credit reporting networks and the courts work under a somewhat different set of rules than in Canada and the United States. A national mail survey of more than 300 US banks lending across international boundaries into Mexico found that many US bankers have reservations about the credibility of credit reporting and credit security systems inside Mexico. If these reservations persist, they can lead to a fundamental restructuring of that developing nation's industry that could discourage international capital inflows and curtail the emergence of small business. Indeed, unless current credit information flows are more fully integrated and are of more uniform quality throughout North America, the North American Free Trade Agreement (NAFTA) is likely to continue to fall short of its promise of significant job growth and improved living standards throughout the continent. © 1997 John Wiley & Sons, Inc. |
