A resident of an OECD country wants to be able to provide some form of
credit guarantee or credit enhancement to a resident of a
developing country who wants to take out a loan originated in the
developing country. The developing country resident taking out the
loan will be responsible for making the repayments but in the event of
default, the OECD resident will be expected to pay the originating
lender the outstanding value of the loan or have the derogatory
information added to their credit. The OECD resident hence uses their
credit to guarantee/enhance the credit worthiness of the person taking
out the loan - who may have no collateral nor an initial means of
establishing a measure of credit worthiness (quantitatively or
qualitatively).
OECD countries of interest include (USA, Canada, UK, France, Germany, Italy)
Developing countries of interest include those in Sub-saharan Africa,
Latin America and the Carribean. Loans may be business loans (e.g. as
typical microcredit loans) or consumer loans.
I would like some research done to specifically answer the following questions:
What types of joint liability models will apply in pricing loans
extended to the developing country debtor in the fashion described
above; pros and cons welcome (e.g. moral hazard etc)?
What legal framework needs to exist between the OECD country and the
developing country to facilitate this?
What framework (technical and otherwise) exists to aggregate or report
credit worthiness or credit score across international borders - and
specifically allow a financial institution in a developing country
pursue the assets of an OECD resident in the event of a double default
i.e. developing country resident defaults and OECD resident defaults
on guarantee?
What are the tax implications to the OECD guarantor - with or/and without default?
What are the implications to rating or pricing loans with such
guarantees (with respect to packaging for resale or securitizing) -
particularly as compared to securitizing microfinance loans?
Are there any organisations that do this? Or case studies of this?
Where can I find further detailed information about all of these - to do my
follow on research? A bibliography will suffice.
I welcome answers from people with either the legal or credit
origination/analytics perspective and will pay for answers that reflect this. I
expect to do my own research so emphasis is
on collating sources of detailed information or reading material
directly relevant to such cross border, consumer level credit
transactions, or where gaps exist then will welcome opinions on what
changes are necessary to facilitate this.
Thank you |
