Information asymmetry and market power in the African banking industry

Agyenim Boateng, Simplice Asongu, Raphael Akamavi, Venessa Tchamyou

    Research output: Contribution to journalArticle

    Abstract

    This study investigates the role of information sharing offices and its association with market power in the African banking industry based on a panel of 162 banks from 42 countries for the period 2001-2011. Five simultaneity-robust estimation techniques namely: Two Stage Least Squares; Instrumental Fixed effects to control for the unobserved heterogeneity; Instrumental Tobit regressions to control for the limited range in the dependent variable; Generalised Method of Moments (GMM) to control for persistence in market power and Instrumental Quantile Regressions (QR) to account for initial levels of market power are employed.
    The following findings have been established from non-interactive regressions. First, the effects of information sharing offices are significant in Two Stage Least Squares, with a positive effect from private credit bureaus. Second, the GMM results suggest that, public credit registries increase market power. Third, from Quintile Regressions, private credit bureaus consistently increase market power throughout the conditional distributions of market power. Given that the above findings are contrary to theoretical postulations, we extended the analytical framework with interactive regressions in order to assess whether the anticipated effects can be established if information sharing offices are increased. Our extended findings show that: (i) negative net effect from public credit registries on market power in GMM regressions and; (ii) negative net impacts from public credit registries on market power in the 0.25th and 0.50th quartiles of market power.
    Original languageEnglish
    Pages (from-to)69-83
    Number of pages15
    JournalJournal of Multinational Financial Management
    Volume44
    Early online date24 Dec 2017
    DOIs
    Publication statusPublished - Mar 2018

    Fingerprint

    Information market
    Information asymmetry
    Africa
    Market power
    Banking industry
    Credit
    Registry
    Information sharing
    Generalized method of moments
    Two-stage least squares
    Persistence
    Robust estimation
    Conditional distribution
    Fixed effects
    Unobserved heterogeneity
    Simultaneity
    Quantile regression
    Tobit regression

    Keywords

    • African banking industry
    • market power

    Cite this

    Boateng, Agyenim ; Asongu, Simplice ; Akamavi, Raphael ; Tchamyou, Venessa. / Information asymmetry and market power in the African banking industry. In: Journal of Multinational Financial Management. 2018 ; Vol. 44. pp. 69-83.
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    Information asymmetry and market power in the African banking industry. / Boateng, Agyenim; Asongu, Simplice; Akamavi, Raphael; Tchamyou, Venessa.

    In: Journal of Multinational Financial Management, Vol. 44, 03.2018, p. 69-83.

    Research output: Contribution to journalArticle

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    AU - Asongu, Simplice

    AU - Akamavi, Raphael

    AU - Tchamyou, Venessa

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