Is Information Diffusion a Threat to Market Power for Financial Access? Insights from the African Banking Industry

Journal of Multinational Financial Management,45(June), pp. 88-104 (2018). DOI: 10.1016/j.mulfin.2018.04.005 .

27 Pages Posted: 4 Oct 2016 Last revised: 22 Jun 2018

See all articles by Simplice Asongu

Simplice Asongu

African Governance and Development Institute

Micheal Batuo

University of Westminster

Jacinta Nwachukwu

Coventry University

Vanessa S. Tchamyou

African Governance and Development Institute

Date Written: October 2, 2016

Abstract

This study assesses how information diffusion dampens the adverse effect of market power on the price and quantity of loans provided by a panel of 162 banks from 39 African countries for the period 2001-2011. The empirical evidence is based on three endogenity-robust estimation techniques, namely: (i) Two Stage Least Squares (2SLS), (ii) Generalised Method of Moments (GMM) and (iii) Instrumental Variable Quantile Regressions (QR). Three key results emerge. First, from the GMM results, a mobile phone penetration rate of 54.29, rising to 57 per 100 people are predicted to neutralise the adverse effect of market power on the average loan price and quantity respectively. Second, from the QR, mobile phone penetration rates of 56.20, 52.04 and 42.76 per 100 people is needed to nullify the negative effect of market power on loan quantity at the 0.10th, 0.25th and 0.90th quintiles respectively. Third, a considerably lower internet penetration rate of 9.49 per 100 people is required to counteract the negative impact of market power on loan quantity at the 0.90th quintile.

Keywords: Financial Access; Market Power; Information Asymmetry; ICT; Africa

JEL Classification: G20; G29; L96; O40; O55

Suggested Citation

Asongu, Simplice and Batuo, Micheal and Nwachukwu, Jacinta and S. Tchamyou, Vanessa, Is Information Diffusion a Threat to Market Power for Financial Access? Insights from the African Banking Industry (October 2, 2016). Journal of Multinational Financial Management,45(June), pp. 88-104 (2018). DOI: 10.1016/j.mulfin.2018.04.005 .. Available at SSRN: https://ssrn.com/abstract=2846846 or http://dx.doi.org/10.2139/ssrn.2846846

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

Micheal Batuo

University of Westminster ( email )

309 Regent Street
London, W1R 8AL
United Kingdom

Jacinta Nwachukwu

Coventry University ( email )

Priory Street
Coventry, CV1 5FB
United Kingdom

Vanessa S. Tchamyou

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

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