Financial Sector Transparency and Net Interest Margins: Should the Private or Public Sector lead Financial Sector Transparency?

Research in International Business and Finance, Volume 54, December 2020, 101260

43 Pages Posted: 8 Jul 2020

See all articles by Baah Kusi

Baah Kusi

University of Ghana - University of Ghana Business School (UGBS)

Elikplimi Agbloyor

affiliation not provided to SSRN

Agyapomaa Gyeke-Dako

University of Ghana - University of Ghana Business School (UGBS)

Simplice Asongu

African Governance and Development Institute

Date Written: June 3, 2020

Abstract

This study examines the effect of private and public sector led financial sector transparency on bank interest margins across eighty-six economies. Using a two-step dynamic system generalized method of moments, least square dummy variables, fixed effects and bootstrap quantile panel models between 2005 and 2016, the findings of the two-step GMM are reported as follows. First, results reveal that financial sector transparency whether led by private or public sector reduces interest margins. Second, while no statistical evidence was found on which of the two (private or public sector led transparency) is more effective in dealing with bank interest margins, public sector-led financial transparency is found to be more consistent in reducing bank interest margins across many more economies. Third, the study shows that the effect of financial sector transparency is visible at lower and middle levels of bank interest margins implying that economies with lower and moderately high bank interest margin level can benefit more from policies targeted at improving transparency in the financial sector. These findings imply that the sampled countries must enact policies and laws that deepen and expand financial sector transparency in order to potentially reduce bank interest margins for the good of banking market participants and society at large.

Keywords: Financial Sector Transparency; Net Interest margins; Private Sector; Public Sector

JEL Classification: G20; G29; L96; O40

Suggested Citation

Kusi, Baah and Agbloyor, Elikplimi and Gyeke-Dako, Agyapomaa and Asongu, Simplice, Financial Sector Transparency and Net Interest Margins: Should the Private or Public Sector lead Financial Sector Transparency? (June 3, 2020). Research in International Business and Finance, Volume 54, December 2020, 101260, Available at SSRN: https://ssrn.com/abstract=3618604 or http://dx.doi.org/10.2139/ssrn.3618604

Baah Kusi

University of Ghana - University of Ghana Business School (UGBS) ( email )

Volta Rd
Accra
Ghana

Elikplimi Agbloyor

affiliation not provided to SSRN

Agyapomaa Gyeke-Dako

University of Ghana - University of Ghana Business School (UGBS) ( email )

Volta Rd
Accra
Ghana

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

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