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Is information diffusion a threat to market power for financial access? Insights from the African banking industry

Author

Listed:
  • Simplice A. Asongu

    (Yaoundé/Cameroon)

  • Enowbi Batuo

    (University of Westminster, UK)

  • Jacinta Nwachukwu

    (Coventry University, UK)

  • Vanessa Tchamyou

    (Yaoundé, Cameroon)

Abstract
This study assesses how information diffusion dampens the adverse effect of market power on the price and quantity of loans provided by a panel of 162 banks from 39 African countries for the period 2001-2011. The empirical evidence is based on three endogenity-robust estimation techniques, namely: (i) Two Stage Least Squares (2SLS), (ii) Generalised Method of Moments (GMM) and (iii) Instrumental Variable Quantile Regressions (QR). Three key results emerge. First, from the GMM results, a mobile phone penetration rate of 54.29, rising to 57 per 100 people are predicted to neutralise the adverse effect of market power on the average loan price and quantity respectively. Second, from the QR, mobile phone penetration rates of 56.20, 52.04 and 42.76 per 100 people is needed to nullify the negative effect of market power on loan quantity at the 0.10th, 0.25th and 0.90th quintiles respectively. Third, a considerably lower internet penetration rate of 9.49 per 100 people is required to counteract the negative impact of market power on loan quantity at the 0.90th quintile.

Suggested Citation

  • Simplice A. Asongu & Enowbi Batuo & Jacinta Nwachukwu & Vanessa Tchamyou, 2016. "Is information diffusion a threat to market power for financial access? Insights from the African banking industry," Research Africa Network Working Papers 16/039, Research Africa Network (RAN).
    • Handle: RePEc:abh:wpaper:16/039
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    More about this item

    Keywords

    Financial access; Market power; Information asymmetry; ICT; Africa;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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