The Effect of Reducing Information Asymmetry on Loan Price and Quantity in the African Banking Industry

Research in International Business and Finance, 41 (October), pp. 185–197 (2017)

African Governance and Development Institute WP/17/012

27 Pages Posted: 20 Apr 2017 Last revised: 4 May 2017

See all articles by Simplice Asongu

Simplice Asongu

African Governance and Development Institute

Date Written: April 20, 2017

Abstract

The purpose of this study is to assess how information sharing offices affect loan price and quantity in the African banking industry. The empirical evidence is based on a panel of 162 banks in 42 countries for the period 2001-2011. From the Generalised Method of Moments, public credit registries decrease loan price. With instrumental Quantile Regressions, two main findings are established. Public credit registries consistently decrease the price of loans whereas private credit bureaus consistently have the opposite effect. Public credit registries increase loan quantity in bottom quintiles (or banks associated with lower loan quantities) while private credit bureaus increase loan quantity in top quintiles (or banks associated with higher loan quantities).

Keywords: Information Asymmetry; Financial Access; Africa

JEL Classification: G20, G29, O16, O55

Suggested Citation

Asongu, Simplice, The Effect of Reducing Information Asymmetry on Loan Price and Quantity in the African Banking Industry (April 20, 2017). Research in International Business and Finance, 41 (October), pp. 185–197 (2017); African Governance and Development Institute WP/17/012. Available at SSRN: https://ssrn.com/abstract=2955640

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

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