Information Asymmetry and Financial Development Dynamics in Africa

By Simplice A. Asongu, Jacinta C. Nwachukwu, Vanessa S. Tchamyou. 2016

117 citations recorded by the source corpus.

We examine policy thresholds of information sharing for financial development in 53 African countries for the period 2004-2011. Public credit registries (PCR) and private credit bureaus (PCB) are used as proxies for reducing information asymmetry whereas financial development includes all financial dimensions identified by the Financial Development and Structure Database (FDSD) of the World Bank, namely: depth, efficiency, activity and size. The empirical evidence is based on interactive Generalised Methods of Moments with forward orthogonal deviations. The following findings are established. First, PCR and PCB have negative effects on financial depth, with the magnitude of the former higher. Second, contrary to PCR which have insignificant effects, PCB has a negative impact on banking system efficiency. Third, PCR and PCB have negative impacts on financial activity, with the magnitude of the latter higher. Moreover, their marginal effects are negative. Fourth, PCR and PCB have positive effects on financial size, with the effect of the former higher. While marginal effects are positive, corresponding thresholds are not within range. Policy implications are discussed.

Subfields: Economics and Econometrics, Information Systems

View Paper: https://www.semanticscholar.org/paper/e71b68e4bebf2d52cdf7d4aa64910dc0bfd5e042

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Citations in the corpus

The Role of Information Sharing in Modulating the Effect of Financial Access on Inequality (2019, background): “According to Claus and Grimes (2003) and Asongu et al. (2016), two main theoretical underpinnings have been documented on the linkages between access to finance and information sharing.”
Effects of globalization on peace and stability: Implications for governance and the knowledge economy of African countries (2017, background): “Third, the negative relationship between the financial indicators and economic incentives confirm the predictions of economic theory as documented by the literature on the surplus liquidity issues in African financial institutions (cf. Saxegaard, 2006; Asongu et al., 2016b).”
Environmental Degradation, ICT and Inclusive Development in Sub-Saharan Africa (2017, background): “Third, there is consensus today that environmental sustainability is a key theme in the post-2015 development agenda (Akpan and Akpan, 2012; Asongu et al., 2016a).”
The Impact of Innovation on the Firm Performance and Corporate Social Responsibility of Vietnamese Manufacturing Firms (2019, background): “In a developing country, the signaling motivation should be stronger due to higher potential malicious effect of information asymmetry [59].”
Information Sharing and Financial Sector Development in Africa (2017, background): “Information-sharing policy thresholds in financial development have been investigated by Asongu et al. (2015) to establish conflicting findings related to the effects of information-sharing bureaus on financial development dynamics of depth, efficiency, activity and size.”
Inequality and gender economic inclusion: The moderating role of financial access in Sub-Saharan Africa (2020, background): “…of foreign aid in order to improve socio-economic development in the post-2015 development agenda (Page & Söderbom, 2015; Jones & Tarp, 2015; Asongu, 2016) whereas another stream has been concerned with nexuses between education, the sharing of information, the redistriction of income and…”
The Role of Knowledge Economy in African Business (2016, background): “Due to substantially documented issues of surplus liquidity in African financial institutions (Saxegaard 2006; Nguena and Tsafack 2014; Asongu 2014; Tchamyou and Asongu 2016; Asongu et al. 2016), we have defined economic incentives in this paper as the ability of surplus deposits in financial instit”
Inequality, ICT and financial access in Africa (2019, unknown): “inequality Consistent with recent financial development literature (Tchamyou &Asongu, 2016; Asongu et al., 2017), we employ propositions which are presented in Table 6.”
Information Asymmetry and Market Power in the African Banking Industry (2017, methodology): “…of African development literature on the role of information sharing offices in financial access (see Barth et al., 2009; Triki & Gajigo, 2014; Asongu et al., 2016a; 1 According to Beck and Hesse (2006, p.1), bank size substantially contributes to differences in interest rate spreads/margins…”