ICT, Information Asymmetry and Market Power in the African Banking Industry

Forthcoming, Research in International Business and Finance

African Governance and Development Institute WP/17/022

30 Pages Posted: 26 Jun 2017 Last revised: 15 Jul 2017

See all articles by Simplice Asongu

Simplice Asongu

African Governance and Development Institute

Nicholas Biekpe

University of Cape Town (UCT)

Date Written: May 4, 2017

Abstract

This study assesses how market power in the African banking industry is affected by the complementarity between information sharing offices and information and communication technology (ICT). The empirical evidence is based on a panel of 162 banks consisting of 42 countries for the period 2001-2011. Four estimation techniques are employed, namely: (i) instrumental variable Fixed effects to control for the unobserved heterogeneity; (ii) Tobit regressions to control for the limited range in the dependent variable; and (iii) Instrumental Quantile Regressions (QR) to account for initial levels of market power. Whereas results from Fixed effects and Tobit regressions are not significant, with QR: (i) the interaction between internet penetration and public credit registries reduces market power in the 75th quartile and (ii) the interaction between mobile phone penetration and private credit bureaus increases market power in the top quintiles. Fortunately, the positive net effects are associated with negative marginal effects from the interaction between private credit bureaus and mobile phone penetration. This implies that mobile phones could complement private credit bureaus to decrease market power when certain thresholds of mobile phone penetration are attained. These thresholds are computed and discussed.

Keywords: Financial Access; Information Asymmetry; ICT

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

Suggested Citation

Asongu, Simplice and Biekpe, Nicholas, ICT, Information Asymmetry and Market Power in the African Banking Industry (May 4, 2017). Forthcoming, Research in International Business and Finance; African Governance and Development Institute WP/17/022. Available at SSRN: https://ssrn.com/abstract=2992450

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

Nicholas Biekpe

University of Cape Town (UCT) ( email )

Private Bag X3
Rondebosch, Western Cape 7701
South Africa

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
23
Abstract Views
182
PlumX Metrics