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Evaluating The Credit Information System In Kuwait Finance Essay


Ci-Net is the main and only CIS in Kuwait. It is used by 34 companies who are all members of Ci-Net. These 34 organizations, banks and credit institutions, cover all loaning institutions in Kuwait, and have been using Ci-Net for several years. This made the study environment more mature and stable (cf. Gatian, 1994; amongst others). This chapter will present the motivation for the study, and the main objectives it be achieved. It will discuss the methodological framework, the subjects, and the locale of the research. Further, it will give an overview of the variables, independent and dependent, and their correlation will be discussed, along with the data collection method and means of analysis.


The end result of the decision making process of whether to accept to loan a borrower or not is based on the usage and performance of the CIS, i.e. decision processes performed by Ci-Net users in Kuwait are based on the output of Ci-Net itself as a CIS. According to Luoto et. al. (2004:4), "fear of competition can make lenders hesitant to share their client information, yet a credit bureau is a "natural monopoly" with increasing returns to scale: when some lenders begin to share information, it creates an incentive for other lenders also to share information. Benefits of information sharing include an improved pool o borrowers, reduced default rates, and lower interest rates". The absence those three factors formed the main obstacle faced by the financial and economic system in Kuwait (cf. Section 2.9) due to the improper applicability and usage of Ci-Net. Hence, rules and laws enforcing the proper usage of Ci-Net in Kuwait by banks and credit institutions were issued by the Kuwaiti Government, and they were to be implemented strictly by all concerned institutions leading to the increase in the performance of Ci-Net, and, ultimately, in the loaning process in Kuwait. Inapplicability of the issued rules and laws by any bank/credit institution was not passed unpunished by law.

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Ci-Net has started operation in 2002. It had a huge impact on the loaning system in Kuwait and had fundamentally changed the way lenders loan money to borrowers. The introduction and operation of a technological system to control the decision making process involve many factors, such as the system design, system content, working experience of the users, and the impact it has on the business. Hence, an evaluation of the usage and performance of Ci-Net in Kuwait proves essential. The following section will present the aims and objectives of the present study.


The present study will try to grasp the idea of evaluating a credit information system that is considered to be recently implemented and to measure the degree of its effectiveness in taking control of the loaning mechanism in Kuwait as a major objective.

Another objective is to evaluate the system itself, in terms of contents and design. Ease of use and user acceptance are believed to be inactive factors in evaluating Ci-Net for the use of the system is obligatory, even if it was user un-friendly and /or very advanced. Hence, user acceptance might have a positive or negative relationship ship with system design and/or content. This will be clear once the results obtained are processed and analyzed.


Therefore, what the present study would try to answers is A Major question and two Minors as following:

Major question: What are the factors that create an impact of Ci-Net on the business of Banks and Financial sectors?

Minor questions:

a) Does Ci-Net need improvements?

b) Evaluate the level of user satisfaction?


H1: There is no statistically significant relation between the experience in the job and the system impact on business.

H2: There is no statistically significant relation between the system content and the system impact on business.

H3: There is no statistically significant relation between the system design and the system impact on business.

H4: There is no statistically significant relation between the use of CI-NET and the system impact on business.


The methodological framework that will be used in analyzing the data and reflecting the results would be a correlational analysis between the various dependent and independent variables as the proposed model below shows (see Section 3.10).


The place of research is Kuwait. The subjects are 150 users, working in banks and credit organizations as loan/credit officers, who are using the application of Ci-Net. Those users were chosen randomly. There is no 'scientific' reason as to the choice of the number 150, apart from the time factor. Besides, the number 150 is believed to represent an adequate sample from which conclusions could be drawn. 150 is a suitable sample comparing to the population of the total of Ci-Net users which is 1200 users only (Personal Communication with Ci-Net), and I believe that the results will reflect their feedback.


Due to confidentiality and the fierce competition, all major banks and credit companies approached refused to provide me with any exact figures as to the number of retail loans and all related details surrounding it, such as the exact number of personal loans, retail provisions, etc. They always referred me to their annual report and their balance sheet; these contained only the Total Amount of retail and corporate loans combined and the Total Provisions of both retail and corporate loans, while what I needed was the Retail Loans only. These are the type of loans that banks and credit companies the Ci-Net for.

Next, I went to the Central Bank of Kuwait to seek the information, which in turn referred me to their Library; the Library then provided me with very limited information which not adequate for research purposes because it was weak and does not reflect any valuable results.

Consequently, I tried to change my source of data and went to the Commercial Bank of Kuwait, where I currently hold the position of a Bank Manager in. I collected a sample of 200 loans applications chosen randomly, but due to a huge number of borrowers, the number 200 appeared, preliminary, to be a very small sample yielding unreliable results. Due to all these barriers and shortcomings, I decided to switch to another qualitative method, namely a questionnaire, which is the perfect data collecting method to be used in this situation. I have designed a questionnaire to collect my data from Ci-Net users as a main data source.

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As for the distribution of the questionnaires, I made appointments with 150 Ci-Net users from various banks and credit companies to hand them the questionnaires. I tried my best to receive back the questionnaire answered on the same day.


In order to analyze the data, qualitative and quantitative methods are sought. The data was collected using the qualitative method outlined above (see Section 3.8), and will be analyzed quantitatively using correlational statistics analysis and cross tabulation through the Statistical Package for Social Sciences, or what is known as SPSS. Results will be displayed by means of tables and histograms to illustrate the relationship between the independent and dependent variables (see Section 3.11). "The terms "dependent variable" and "independent variable" are used in similar but subtly different ways in mathematics and statistics as part of the standard terminology in those subjects. They are used to distinguish between two types of quantities being considered, separating them into those available at the start of a process and those being created by it, where the latter (dependent variables) are dependent on the former (independent variables)" (Wikipedia, 2010).


Technology Acceptance Model (TAM) is a theory used in information systems to refer to how users accept and use technology (Legris & Collerette, 2003). There are various factors which might influence a user's decision on how and when they will use the technology. Most common factors are perceived ease of use (PEOU) and perceived usefulness (PU). Users perceive a system to be useful if it will enhance or improve their job performance. A system should be easy to use without requiring a user to apply much effort. It is therefore required that an information system such as credit information system should obey the TAM model. This will ensure that users perceive it to be useful to them and they wouldn't have to apply much effort to use it. A review of the literature proved that what is known as the Technology Acceptance model (TAM) devised by Davis (1989) is the most widely used, extended, and cited model of system evaluation (cf. Zain et. al., 2005; Gatian, 1994; Hossein and Silva, 2009; Luoto et. al., 2004; amongst others).

Zain et al. (2005:883) defined a set of factors that influenced the success of his studied system. Those factors, influenced in turn by the TAM model, were as the following: User involvement, Task Characteristics, Systems Characteristics, User Experience, Top Management Support, Ease of Use, and Information Quality. I have decided to develop a model based on the TAM to suit the purpose of the present study to find and evaluate the relationship between the dependent and independent variables. The proposed model is as the following:

(Figure2.1: The Proposed Model- Showing that the variable 'impact on business' is dependent on the other four independent variables)


For the present study, four independent variables and one dependent variable have been identified as the following:


System content: System accuracy, importance of information provided...)

System design: Ease of navigation, accuracy of information, quality and quantity of content, Layout, design, customer support, meeting needs…)

System use : User satisfaction and acceptance

User experience on job: experience in the organization whether is a bank or a financial sector, experience in the credit department, for how long he/she has using Ci-Net system?


Impact on business: for the Ci-Net we should looking for (amount of lending, pool of borrowers, functioning of a credit market ...)

In order to evaluate the performance of Ci-Net, we have to look at whether it has a positive or a negative impact on the business. Hence, the independent variables identified above are used to measure the impact on the business also the user's satisfaction. The end results of the correlation between the two will gives us the answers of this major and minor questions research or study.

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