The Social Value and Notable Features of the Credit Rating Industry

The social value and distinctive features of the credit evaluation industry

1. The social value of the credit evaluation industry

Philosophically speaking, the development of human society has many similarities with the development of nature, and the industry balance mechanism of market economy is surprisingly similar to the ecological balance of nature. When the natural enemies of a certain animal decrease, it will bring about a chain effect of ecological imbalance. When a certain industry in the market economy is missing or underdeveloped, it will also lead to the imbalance of the market economy. We can look at the world, whether it is our country or other countries, wherever the credit evaluation industry is underdeveloped, there are many liars and the overall social integrity is poor. At present, the overall lack of credit in our country, the phenomenon of failure of keeping promises and benefits of breaking promises is common. The fundamental reason is that we have long-term lack of credit evaluation industry to restrain liars.

Historically, the reason for the credit evaluation industry to arise is the prevalence of scammers. The bounden duty of the credit evaluation industry is to fight fraud. There is a famous saying in the credit evaluation industry: it is our creed to make the untrustworthy fearful. Anti-fraud is the social value of the credit evaluation industry. Based on this, the World Credit Organization [WCO] defines the credit evaluation industry as an industry born out of the social needs of anti-fraud, with anti-fraud as its bounden duty, and specializing in credit information collection, credit evaluation and related services.

From the reasons for the emergence of the credit evaluation industry and the value of the credit evaluation industry, we can also see the long-term existence of the credit evaluation industry, because the market economy consists of countless independent economic entities independently conducting transactions of various economic resources, and the market economy The more developed, the finer the division of labor, the larger the trading area, and the more information asymmetry between economic transaction subjects. As long as there is information asymmetry, there will be cases where dishonest people profit by engaging in dishonest behaviors such as fabricating the truth. The existence of the credit evaluation industry.

Second, the salient features of the credit evaluation industry

(1) Coexistence and win-win

The "symbiosis and win-win" relationship between credit institutions is the most prominent feature of the credit evaluation industry, and almost no other industry is more remarkable than it. The fierce competition of "you lose and I grow", "I win and you lose" and the excessive pursuit of short-term interests among various practitioners in most industries make people ignore or directly deny the "symbiosis and symbiosis" between them. win" relationship. However, in the course of the development of the credit evaluation industry, the "symbiosis and win-win" interdependent relationship between credit institutions has long been recognized by people in the industry.

The root of the interdependent relationship of "coexistence and win-win" is that the main basis for credit institutions to provide services to the society is credit information. However, credit information is unlimited and changes with the actual changes in the social economy. Neither company can guarantee that its information is complete. Faced with a customer's entrustment, the largest credit company cannot guarantee that its own credit information is sufficient, and the smallest credit company may also have credit information that is of great value to the customer. Therefore, in order to provide customers with more objective and More valuable credit reports require information sharing with other credit agencies.

Later, the expansion of the credit evaluation industry to the commercial debt collection business made credit institutions pay more attention to and maintain this "coexistence and win-win" interdependence relationship. The reason why the credit evaluation industry is successful in commercial debt collection business is because of this mutual Unreserved cooperation enables the debtor's debt records to be quickly transmitted to almost every corner of the world, eventually forcing the debtor to fulfill the repayment obligation. The development of credit institutions' collection of commercial accounts has greatly accelerated the sharing of credit information among credit institutions.

The interdependent relationship of "coexistence and win-win" is a remarkable feature of the credit evaluation industry, and it is also one of the reasons for the rapid development of the credit evaluation industry for more than 100 years. The transmission of information provides customers with valuable credit reports in a timely manner, greatly increases the intensity of credit threats and credit penalties, realizes the social value of the credit evaluation industry, and in turn stimulates the social demand for credit products.

This "coexistence and win-win" interdependent relationship makes the competition among credit institutions very rational. During the development of the international credit evaluation industry, few credit institutions attack each other or use unfair competition to try to squeeze out their opponents. phenomenon occurs.

(2) Social and public interest priority

Most industries, especially the service industry, mostly follow the principle of prioritizing the interests of customers, but in the credit rating industry, the principle of prioritizing social and public interests should be followed, that is to say, when the interests of customers conflict with social and public interests, Credit institutions and credit practitioners should first safeguard social public interests. The reason is as follows:

1. This is determined by the value of the credit evaluation industry. As discussed above, the value of the credit evaluation industry is to curb the prevalence of scammers. If the credit evaluation industry engages in things that are detrimental to the public interest, it will lose its existence value. If a credit institution engages in things that harm the public interest, it will ruin its credibility and lose long-term customers. For example: a customer spends money to buy a credit evaluation report that evaluates himself falsely from a credit agency, then the customer and the organizations affected by it will no longer trust the credit evaluation report issued by the credit agency, or even, This client and the units it affects will question the fairness of the entire credit evaluation industry.

2. The development of credit institutions is based on their credibility. Without credibility, there will be no stable customers to buy their credit products. However, the accumulation and formation of credibility requires long-term and firm safeguarding of social public interests.

3. Credit institutions are most likely to be exposed when they engage in things that harm the public interest. Credit institutions collect and disseminate the dishonesty records of all transaction subjects, and are the supervisors of social public order and good customs. Although a credit institution is a commercial institution, its business has the nature of public affairs. Since the status of credit institutions and other economic entities is equal, the supervision of other economic entities by credit institutions has also evolved into: the supervision of credit institutions by other economic entities. This makes it easier for credit institutions to be exposed once they engage in things that harm the public interest.

4. Credit institutions are most likely to be resisted by customers with a sense of social responsibility when they engage in things that harm the public interest. Consumers of credit products are generally organizations with high management quality, and these organizations often have a high sense of social responsibility. These organizations have high moral expectations for credit institutions. If they find that the credit institutions themselves are dishonest, they will resist or even actively expose the bad behavior of the credit institutions.

5. The principle of giving priority to social and public interests is the embodiment of the practice standards of the credit evaluation industry. The practice criteria of the credit evaluation industry are: independence, neutrality, objectivity, and fairness. These practice criteria themselves include the principle of prioritizing social and public interests.

6. Credit institutions will bear legal responsibility if they engage in things that harm the public interest. If a credit agency deliberately makes a false credit evaluation and misleads the public, it will bear corresponding legal responsibilities.

Excerpted from: "Building an Integrity Unit——Risk Control and Integrity Management" (by Fang Bangjian)

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