Information Asymmetry and Financial Development Dynamics in Africa

Simplice Asongu, Jacinta Nwachukwu () and Vanessa Tchamyou ()

No 15/025, Working Papers of the African Governance and Development Institute. from African Governance and Development Institute.

Abstract: We examine policy thresholds of information sharing for financial development in 53 African countries for the period 2004-2011. Public credit registries (PCR) and private credit bureaus (PCB) are used as proxies for reducing information asymmetry whereas financial development includes all financial dimensions identified by the Financial Development and Structure Database (FDSD) of the World Bank, namely: depth, efficiency, activity and size. The empirical evidence is based on interactive Generalised Methods of Moments with forward orthogonal deviations. The following findings are established. First, PCR and PCB have negative effects on financial depth, with the magnitude of the former higher. Second, contrary to PCR which have insignificant effects, PCB has a negative impact on banking system efficiency. Third, PCR and PCB have negative impacts on financial activity, with the magnitude of the latter higher. Moreover, their marginal effects are negative. Fourth, PCR and PCB have positive effects on financial size, with the effect of the former higher. While marginal effects are positive, corresponding thresholds are not within range. Policy implications are discussed.

Keywords: Information Asymmetry; Financial Development (search for similar items in EconPapers)
JEL-codes: G20 G29 O16 O55 (search for similar items in EconPapers)
Pages: 25
Date: 2015-06
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Citations: View citations in EconPapers (19)

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http://www.afridev.org/RePEc/agd/agd-wpaper/Inform ... namics-in-Africa.pdf Revised version, 2015 (application/pdf)

Related works:
Working Paper: Information Asymmetry and Financial Development Dynamics in Africa (2015)
Working Paper: Information Asymmetry and Financial Development Dynamics in Africa (2015)
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