Yusuf Mansur

Over the past few years, Jordan has undergone an important legal and economic transformation by reducing its reliance on the imprisonment of debtors as a means of debt collection. This shift has sparked considerable debate. Some view it as a progressive reform aligned with international best practices and the protection of individual rights and freedoms, while others fear it may lead to higher default rates, weaker repayment discipline, and reduced confidence in commercial and financial transactions.

The real question, however, is not whether debtors should be imprisoned, but rather: what is the most effective mechanism for ensuring financial obligations are honored? Can credit history replace imprisonment as a tool for financial discipline and creditor protection?

In reality, debtor imprisonment is no longer the primary debt recovery mechanism in most advanced economies. Modern states concluded decades ago that imprisonment—besides being costly and burdensome on public finances—does not generate income, does not help debtors repay their obligations, and may even worsen the problem by preventing them from working and producing. Consequently, most countries replaced this approach with what may be described as a “long-term economic penalty,” embodied in credit history and credit scoring systems.

In the United States, Canada, the United Kingdom, Australia, and most European countries, individuals understand that failure to meet their financial obligations will not result in imprisonment. However, it will affect their credit reputation for many years, potentially preventing them from obtaining a mortgage, car financing, credit cards, commercial facilities, or funding for a new business venture. As a result, repayment discipline shifts from fear of legal punishment to the desire to preserve one's economic reputation.

This reflects what economists often refer to as the internalization of costs and benefits, which is the incorporation of future economic consequences into present decision-making. Individuals repay their debts not because they fear prison, but because they understand that default carries long-term economic costs.

International experience has demonstrated the effectiveness of credit reporting and credit scoring systems. Credit information systems have reduced lending risks, improved banks’ ability to assess borrowers, expanded access to finance, lowered borrowing costs for responsible customers, and helped curb excessive indebtedness. They have also provided financial institutions with more accurate and equitable risk management tools.

Today, a credit history is among the most valuable economic assets an individual or business can possess. In many advanced economies, banks do not begin by examining collateral; they first review the applicant’s credit record. In some cases, the credit profile is more important than the value of the collateral itself. After all, the primary role of a bank is to provide financing and financial assets—not to trade in land and real estate.

In Jordan, institutional attention to this issue began with the enactment of the Credit Information Law No. 15 of 2010, which established the legal framework for specialized credit information companies. Subsequently, the Central Bank of Jordan granted the first credit bureau license to CRIF Jordan, which commenced operations in 2016.

Since then, CRIF has collected data from banks, finance companies, leasing companies, microfinance institutions, and a number of service providers. It produces credit reports and credit scores that assist financial institutions in evaluating clients before extending financing.

Undoubtedly, this represents a significant improvement compared with the situation a decade ago. Banks now possess more comprehensive information about borrowers, and lending decisions increasingly rely on objective data rather than personal judgment or relationships. Citizens can also access their own credit reports and gain a clearer understanding of their financial standing.

Yet an important question remains: Has Jordan’s credit information system become a genuine substitute for debtor imprisonment? The answer, at least for now, appears to be: not entirely. For the system to function effectively, credit history must become a decisive factor in economic life. Citizens must recognize that any default will directly affect their future ability to borrow, invest, or obtain financial facilities. Likewise, all major financial and commercial institutions should actively participate in information sharing and genuinely incorporate credit scores into their decision-making processes.

At the same time, many Jordanians remain unaware of the importance of their credit records, and the practical impact of credit history on many economic decisions remains more limited than in advanced economies. This suggests that Jordan’s transition from a culture of legal sanctions to one based on credit reputation is not yet complete.

Another important issue concerns the structure of the credit reporting market itself: Is it appropriate for Jordan to have only one credit bureau? There are strong arguments in favor of a single provider. A unified database reduces inconsistencies, lowers operational costs, and facilitates regulatory oversight by the Central Bank. Furthermore, Jordan’s relatively small market may not be large enough to sustain multiple competing firms.

However, the existence of only one credit bureau also raises legitimate concerns regarding competition, innovation, service quality, and even potential monopoly effects. In the United States, for example, several major credit bureaus operate simultaneously, including Equifax, Experian, and TransUnion. Competition among these firms has improved data quality, fostered innovation, and reduced costs for users.

This does not necessarily mean Jordan immediately requires three or four credit bureaus. Nonetheless, it is reasonable to ask whether the Jordanian market has matured sufficiently to support one or more competitors to CRIF in the future. If market size is considered insufficient, policymakers may even consider supporting the emergence of another provider to encourage competition and innovation.

Another issue of equal importance is the responsibility of the credit bureau itself. The success of the system depends not only on collecting data, but also on ensuring its accuracy, comprehensiveness, timeliness, and the ability of individuals and firms to challenge and correct errors. A credit reporting system can only be considered fair when information is accurate, up to date, transparent, and subject to review.

The importance of credit history extends beyond consumer lending and banking. It is directly linked to a broader issue: the economy’s ability to finance investment through leasing and movable assets financing.

Modern economies do not rely solely on real estate as collateral. Increasingly, financing is based on machinery, equipment, vehicles, inventories, accounts receivable, and other movable assets. This is why advanced economies have developed comprehensive legal frameworks allowing such assets to serve as collateral.

Jordan attempted to move in this direction through the enactment of the Financial Leasing Law in 2002, the development of legislation governing movable assets, and the establishment of a registry for security interests in movable property. The objective was to enable small and medium-sized enterprises (SMEs) to access financing without owning high-value real estate.

The philosophy of financial leasing is both simple and economically powerful. Instead of paying the full price of machinery, equipment, or vehicles upfront, a leasing company acquires the asset and leases it to the client over an extended period in exchange for regular payments, often with an option to purchase at the end of the contract.

This allows entrepreneurs to allocate scarce capital toward expanding production rather than purchasing assets outright. A manufacturer, for example, can invest in expanding a factory rather than tying up resources in trucks or equipment. The model has proven highly successful across North America, Europe, and Asia because it enables businesses to acquire productive assets without requiring substantial liquidity or real estate collateral.

Despite having the legal framework in place for many years, Jordan’s financial leasing market remains significantly smaller than its potential. Likewise, the use of movable assets as collateral remains limited compared with international practice.

The reasons appear to extend beyond legislation itself. They involve broader issues related to risk management, credit information systems, and the efficiency of legal enforcement mechanisms. In advanced economies, leasing companies depend on two critical pillars: comprehensive credit information that allows accurate borrower assessment, and efficient legal procedures that enable the rapid recovery of leased assets in cases of default.

If credit history systems remain incomplete or have limited practical impact, risk perceptions rise. As a result, financing becomes more expensive, and institutions become less willing to expand leasing and movable asset financing. In some cases, leasing companies continue to require real estate collateral because they fear that leased equipment may be sold or transferred without adequate legal deterrence.

Ironically, Jordan has undertaken three major reforms over the past decade in the right direction: the establishment of a credit bureau, the creation of a movable collateral registry, and the reduction of debtor imprisonment. Yet these reforms continue to operate with varying degrees of integration.

Credit history has not yet become a decisive factor across all financial transactions. Financing based on movable assets remains below its potential, and many SMEs continue to rely primarily on real estate collateral.

Indeed, one of the reasons advanced economies were able to abandon debtor imprisonment is that they developed strong and credible alternatives. A borrower in the United States or the United Kingdom may not face imprisonment for default, but they face an immediate loss of creditworthiness, difficulty obtaining future financing, and efficient enforcement against pledged assets.

If traditional sanctions are removed without strengthening these alternatives, financial markets may experience higher risks, weaker confidence, and increased financing costs.

For Jordan to successfully transition from a philosophy of debtor imprisonment to one of credit discipline, the entire ecosystem must function effectively. Credit history, financial leasing, movable collateral registries, and SME financing are all interconnected components of the same system.

If these components operate in an integrated manner, Jordan will be able to expand access to finance, reduce excessive dependence on real estate collateral, increase investment and productivity, and create more jobs. If they continue to function only partially or independently, a substantial portion of their economic benefits will remain unrealized.

Ultimately, the issue is no longer whether debtors should be imprisoned. The real challenge is building a modern economy based on information, transparency, credit reputation, and productive finance.

More than a decade after the enactment of the Credit Information Law and nearly ten years after the launch of CRIF Jordan, perhaps the time has come for a comprehensive national evaluation of the experience. What has been achieved? What remains unfinished? Has credit history truly become the primary mechanism of financial discipline in Jordan? And, have financial leasing and movable asset financing fulfilled their intended role?

The answers to these questions will largely determine Jordan’s ability to move from an economy dependent on legal sanctions and traditional real estate collateral toward one driven by information, reputation, and efficient capital allocation. After all, modern economies are not built through prisons; they are built through information, trust, and transparency.


The writer is a former Jordanian Minister of State for Economic Affairs