The ratio of private sector credit used by households and firms to GDP has also rapidly increased, though it is still low in international standards. Of course, raising the share of private credits in the financial system does not necessarily mean that each and every segment of the population would gain access to financial services. The low-income segment of the society, in particular, may not have access to capital and that would have two principal adverse effects. First, they may not be able to raise the expected value of their income and therefore of consumption and future investment and asset accumulation. Second, due to lack of access to credit, the poor would face high variation in their income and consumption, and the downward risk on income threatens their ability to satisfy basic consumption needs. Increasing the funds available for entrepreneurs that have micro-scale business plans but do not have access to credit, have merits such as contributing to the production level and unemployment ratio while also strengthening the social structure of a country. Of course, it should be noted here that while the benefits from financing these activities are more or less common, selection of main business areas where these funds should be used obviously depends on country specific circumstances and needs. Dear Guests, In the last part of my speech, I would like to share with you my thoughts on the external sources of “access to finance”.
This database enables to prevent extension of credit to a person or legal entity exceeding its payment capacity. Applications are based on data exchange on loan limit and risk information on bank customers, protested bills information, identity information of the customers subject to non-performing consumer loan and credit card, and loan limit and risk information on customers of financial leasing companies and factoring companies. Currently we are at the process of transferring the Risk Center Unit to the Banks Association of Turkey. A separate and private company was also set up by private banks in 1995 as Credit Bureau to respond to the demands of the financial community. The Credit Bureau promotes the exchange of information among financial institutions about the credit history of potential customers. I should also emphasize the importance of the new capital accord, the Basel-II. Along with the implementation of Basel-II, the access of small and medium size enterprises to bank credit will depend heavily on their financial and organizational structures. According to the new accord, those enterprises that adhere to sound corporate governance principles will have an advantage in access to cheaper finance through banking sector. They will also have better access to finance if they improve their financial disclosure standards. Hence, it is  2  BIS Review 21/2008  imperative for small and medium size enterprises to take the necessary steps and prepare themselves for the requirements of the Basel-II without any delay.