These regular members have a duty to provide all of their small business client data for the CRD in return for the CRD’s creditrisk scoring service, statistical information, etc.
If these financial institutions cease transactions with a client firm, subsequent client data are not collected.
For the same reason, financial institutions do not offer data on high credit risk and unprofitable firms becausethey often cease transactions with these firms.
The CRD also includes data on CGCs.
CGCs in Japan offer loan guarantees for small businesses that have difficulty obtaining bankloans.
In general, small businesses that use the loan guarantee pro-gram are smaller, have higher credit risk, and are less profitable, sothe sample from CGCs mostly includes this type of firm.
Further-more, the firm data only start to accumulate after bank transactions commence, so the database may exclude many young firms.
Inaddition, the CRD omits firms that do not borrow from financial institutions because the data sample comprises only bank clients.
In sum, the CRD includes firms with high or low credit risk and profitable and unprofitable firms.
However, the CRD data tends to exclude larger and younger small businesses and those without a bank loan history.