Management of Information Asymmetry in Credit Transactions by the Seller Through Credit Insurance and the way of Managing this Risk by the Insurer

Nowadays, most of the transactions are concluded in credit terms that impose the risk of non-receipt of credit on the seller. The risk may be due to two categories of commercial and political risks such as inability, unwillingness or bankruptcy of the customer. Although the information asymmetry may exists in both categories of these risks; it is more possible to occur in commercial risks as the credit buyer knows more than anyone about his intention to pay the debt when it is due. Also, he is usually the one who is aware of his insolvency and probable bankruptcy and may hide the information from the credit seller. So, to cover these kinds of risks, the commercial companies buy credit insurance. Credit insurance is one of the methods of managing information asymmetry between buyer and seller as a knowledge unequivalence between the two. By providing some tools for the seller, credit insurance can reduce the information asymmetry. In this research, relying on the library method and with a descriptive-analytical approach, an attempt has been made to describe the concepts and explain the subject, especially considering the novelty of commercial credit insurance in the Iranian legal system. The authors believe that credit insurers can have a significant effect on reducing this asymmetry by providing credible sources of information and additionally the possibility of monitoring their buyers. Furthermore due to their expertise they could manage the information asymmetry between themselves and their insured satisfactorily, often by using Contractual arrangement.