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

No 17/022, Research Africa Network Working Papers from Research Africa Network (RAN)

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. Three 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 (search for similar items in EconPapers)
JEL-codes: G20 G29 L96 O40 O55 (search for similar items in EconPapers)
Pages: 30
Date: 2017-04
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (36)

Published: Research in International Business and Finance, Volume 44, April 2018, Pages 518-531

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http://publications.resanet.org/RePEc/abh/abh-wpap ... Banking-Industry.pdf Revised version, 2017 (application/pdf)

Related works:
Journal Article: ICT, information asymmetry and market power in African banking industry (2018)
Working Paper: ICT, Information Asymmetry and Market Power in the African Banking Industry (2017)
Working Paper: ICT, Information Asymmetry and Market Power in the African Banking Industry (2017)
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