Information Asymmetry and Market Power in the African Banking Industry

Agyenim Boateng (), Simplice Asongu, Raphael Akamavi () and Vanessa Tchamyou ()
Additional contact information
Agyenim Boateng: Glasgow Caledonian University, UK
Raphael Akamavi: Hull, UK

No 16/032, Working Papers of the African Governance and Development Institute. from African Governance and Development Institute.

Abstract: This study investigates the role of information sharing offices and its association with market power in the African banking industry. The empirical evidence is based on a panel of 162 banks from 42 countries for the period 2001-2011. Five simultaneity-robust estimation techniques are employed, namely: (i) Two Stage Least Squares; (ii) Instrumental Fixed effects to control for the unobserved heterogeneity; (iii) Instrumental Tobit regressions to control for the limited range in the dependent variable; (iv) Generalised Method of Moments (GMM) to control for persistence in market power and (v) Instrumental Quantile Regressions (QR) to account for initial levels of market power. The following findings have been established from non-interactive regressions. First, the effects of information sharing offices are significant in Two Stage Least Squares, with a positive effect from private credit bureaus. Second, in GMM, public credit registries increase market power. Third, from Quintile Regressions, private credit bureaus consistently increase market power throughout the conditional distributions of market power. Given that the above findings are contrary to theoretical postulations, we extended the analytical framework with interactive regressions in order to assess whether the anticipated effects can be established if information sharing offices are increased. The extended findings show a: (i) negative net effect from public credit registries on market power in GMM regressions and; (ii) negative net impacts from public credit registries on market power in the 0.25th and 0.50th quintiles of market power.

Keywords: Financial access; Market power; Information asymmetry (search for similar items in EconPapers)
JEL-codes: G20 G29 L96 O40 O55 (search for similar items in EconPapers)
Pages: 29
Date: 2016-09
New Economics Papers: this item is included in nep-ban, nep-com, nep-eff and nep-sog
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (46)

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http://www.afridev.org/RePEc/agd/agd-wpaper/Inform ... Banking-Industry.pdf Revised version, 2016 (application/pdf)

Related works:
Journal Article: Information asymmetry and market power in the African banking industry (2018)
Working Paper: Information Asymmetry and Market Power in the African Banking Industry (2016)
Working Paper: Information Asymmetry and Market Power in the African Banking Industry (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:agd:wpaper:16/032

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