Information Sharing and Conditional Financial Development in Africa

African Governance and Development Institute WP/16/001

26 Pages Posted: 27 Jan 2016

See all articles by Simplice Asongu

Simplice Asongu

African Governance and Development Institute

John Chukwudi Anyanwu

African Development Bank

Vanessa S. Tchamyou

African Governance and Development Institute

Date Written: January 24, 2016

Abstract

This study examines conditional financial development from information sharing in 53 African countries for the period 2004-2011, using contemporary and non-contemporary quantile regressions (QR) which enable the assessment of the effect of information sharing throughout the conditional distributions of financial development dynamics. The policy relevance of the QR approach builds on the motivation that blanket policies on the role of information sharing in financial development may not be effective unless they are contingent on initial levels of financial development and tailored differently across countries with low, intermediate and high levels of financial development. Information sharing is measured with private credit bureaus (PCB) and public credit registries (PCR) while financial development is proxied with dynamics of depth, efficiency, activity and size. The following findings are established. First, for financial depth, while there is a positive threshold effect from PCR in money supply and liquid liabilities, the effect from PCB is mixed. Second, for financial efficiency, there is a: (i) contemporary positive threshold from PCR and mixed effect from PCB in banking system efficiency and (ii) U-shape and positive threshold from PCR and PCB respectively in financial system efficiency. Third, for financial activity, there are consistent positive thresholds from PCR and PCB in banking system activity and financial system activity. Fourth, there are negative thresholds from PCR and PCB in financial size. Positive thresholds are consistent incremental financial development rewards from PCR and/or PCB with increasing financial development and vice-versa for negative thresholds. Mixed effects are characterised by S-shaped, Kuznets or wave-like patterns. As a main policy implication, initial conditions in financial development are essential to materialise incremental benefits from PCR and PCB. Other policy implications are discussed.

Keywords: Information Sharing; Financial Development; Quantile regression

JEL Classification: G20; G29; O16; O55; C52

Suggested Citation

Asongu, Simplice and Anyanwu, John Chukwudi and S. Tchamyou, Vanessa, Information Sharing and Conditional Financial Development in Africa (January 24, 2016). African Governance and Development Institute WP/16/001. Available at SSRN: https://ssrn.com/abstract=2722516 or http://dx.doi.org/10.2139/ssrn.2722516

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

John Chukwudi Anyanwu

African Development Bank ( email )

Rue Joseph Anoma
Abidjan, Ivory Coast 01 BP 1387
Ivory Coast (Cote D'ivoire)

Vanessa S. Tchamyou

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

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