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Credit information sharing and bank loan pricing: do concentration and governance matter?

Credit information sharing and bank loan pricing: do concentration and governance matter?
Credit information sharing and bank loan pricing: do concentration and governance matter?
The development of credit information sharing schemes in developing countries has gained significant attention in recent times along with ongoing financial sector reforms. In this paper, we provide first-hand evidence of the effect of credit information sharing on credit intermediation cost in these countries, and consequently ascertain the extent to which the credit information sharing–credit intermediation cost nexus may be accentuated by banking market concentration and governance quality. Using a large dataset covering 272 banks from 27 African countries over the 2004-2012 period, we uncover four new findings. First, we find that credit information sharing does reduce credit intermediation cost. Second, we show that the relationship between credit intermediation cost and credit information sharing is conditional on banking market concentration. Third, our findings suggest that governance quality moderates the effect of credit information sharing on credit intermediation cost. Finally, we find that banking market concentration reduces credit intermediation cost, but the effect is moderated by credit information sharing. Overall, our findings suggest that credit information sharing may serve as a useful policy tool for achieving financial sector stability in developing countries.
Banking market concentration, Credit information sharing, Developing countries, Governance
1076-9307
Fosu, Samuel
21c4f19e-d261-4d58-9fc8-74696aa0113b
Danso, Albert
a78c616e-5975-49b3-825c-f3f6b617b02b
Agyei-Boapeah, Henry
37005f29-d453-458e-b6b5-cd92e55587a4
Ntim, Collins
1f344edc-8005-4e96-8972-d56c4dade46b
Fosu, Samuel
21c4f19e-d261-4d58-9fc8-74696aa0113b
Danso, Albert
a78c616e-5975-49b3-825c-f3f6b617b02b
Agyei-Boapeah, Henry
37005f29-d453-458e-b6b5-cd92e55587a4
Ntim, Collins
1f344edc-8005-4e96-8972-d56c4dade46b

Fosu, Samuel, Danso, Albert, Agyei-Boapeah, Henry and Ntim, Collins (2020) Credit information sharing and bank loan pricing: do concentration and governance matter? International Journal of Finance & Economics. (doi:10.1002/ijfe.2099). (In Press)

Record type: Article

Abstract

The development of credit information sharing schemes in developing countries has gained significant attention in recent times along with ongoing financial sector reforms. In this paper, we provide first-hand evidence of the effect of credit information sharing on credit intermediation cost in these countries, and consequently ascertain the extent to which the credit information sharing–credit intermediation cost nexus may be accentuated by banking market concentration and governance quality. Using a large dataset covering 272 banks from 27 African countries over the 2004-2012 period, we uncover four new findings. First, we find that credit information sharing does reduce credit intermediation cost. Second, we show that the relationship between credit intermediation cost and credit information sharing is conditional on banking market concentration. Third, our findings suggest that governance quality moderates the effect of credit information sharing on credit intermediation cost. Finally, we find that banking market concentration reduces credit intermediation cost, but the effect is moderated by credit information sharing. Overall, our findings suggest that credit information sharing may serve as a useful policy tool for achieving financial sector stability in developing countries.

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Accepted_manuscript_Sammy_IJFE_18_June_2020 - Accepted Manuscript
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Accepted/In Press date: 18 June 2020
Keywords: Banking market concentration, Credit information sharing, Developing countries, Governance

Identifiers

Local EPrints ID: 441644
URI: http://eprints.soton.ac.uk/id/eprint/441644
ISSN: 1076-9307
PURE UUID: b718a681-f6db-41ce-b748-400a101d6141
ORCID for Henry Agyei-Boapeah: ORCID iD orcid.org/0000-0003-4798-6324
ORCID for Collins Ntim: ORCID iD orcid.org/0000-0002-1042-4056

Catalogue record

Date deposited: 23 Jun 2020 16:30
Last modified: 26 Nov 2021 02:27

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Contributors

Author: Samuel Fosu
Author: Albert Danso
Author: Henry Agyei-Boapeah ORCID iD
Author: Collins Ntim ORCID iD

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