Mali Financial Sector Assessment Program : Legal and Judicial Aspects of the Credit Environment
A country’s legal and judicial environment can help or hinder access to credit. In addition to the banking law governing the organization of the sector, the operations of credit institutions are subject to several laws. Four components of Malian bu...
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| Format: | Report |
| Language: | English en_US |
| Published: |
Washington, DC
2016
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| Online Access: | http://documents.worldbank.org/curated/en/2016/05/26361599/mali-legal-judicial-aspects-credit-environment-technical-note http://hdl.handle.net/10986/24271 |
| Summary: | A country’s legal and judicial
environment can help or hinder access to credit. In addition
to the banking law governing the organization of the sector,
the operations of credit institutions are subject to several
laws. Four components of Malian business law are
particularly relevant in assessing the position of
creditors, the law on secured transactions, the law on
collective proceedings, the law on information-sharing
related to debtors (sometimes called the credit reporting
law), and the law on collection and enforcement proceedings.
If creditors cannot have confidence in their legal
environment, they will be inclined to lend only to persons
they know well. In this regard, it is telling to note that
in Mali, the 50 biggest clients account for 39.3 percent of
the credit extended by banks (although this percentage has
fallen in recent times). Furthermore, access to credit
remains a major constraint in the Malian business world.
Although the reasons are not confined solely to the legal
sphere, it is important to point out that, according to the
2010 Enterprise Survey, Malian enterprises cited access to
credit as the main constraint hampering the business
environment (43.9 percent of enterprises). The same study
showed that in the case of loans involving a security right,
the value of the assets pledged stood at 201.4 percent of
the amount borrowed, reflecting the lack of confidence by
banks in their ability to actually enforce their rights. In
addition, in view of the fact that 58 percent of loans
require a pledged asset which, in most instances, takes the
form of immovable property, persons who do not own such
assets are, de facto, shut out of the system and unable to
seek credit. |
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