Banks’ internal ratings also tend to improve in good times, presumably because banks often look only a short time ahead and simply extrapolate recent default experience. As for quantitative models for evaluating credit risk, most do not incorporate macro variables and rely heavily on such market-determined variables as equity prices and credit spreads.
This is of concern as, micro- small- and medium-sized enterprises (MSMEs) account for about 90 percent of business enterprises in sub-Saharan Africa, they account for about a third of GDP, and contribute about 45 percent of employment and job creation.5  Studies from various African countries have established the key impediments to SME financing to include; their perceived high risk profile, information asymmetry, and the lack of traditional collateral.