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Credit Referencing Bureaus and Bank Credit Risk: Evidence from Ghana

Author

Listed:
  • Baah Aye Kusi
  • Elikplimi Komla Agbloyor
  • Vera Ogeh Fiador
  • Kofi Achampong Osei

    (University of Ghana Business School)

Abstract

The study takes advantage of the introduction of Credit Referencing Bureaus (CRBs) in Ghana to provide evidence of the effects of information sharing, employing a Prais-Winsten panel estimation of 25 banks from 2006 to 2013. The study establishes that CRBs are negatively related to bank credit risk in Ghana. This implies that banks that use the services and products of CRBs in their operations are able to reduce their credit risk by reducing information asymmetry, which enhances banks predictive power on borrowers and also pressures borrowers to service their loans due to future denial of loan by banks. The study also found bank capital, size, loan concentration, gross domestic product growth rate and inflation rate to be significant determinants of bank credit risk. It is recommended that an expansion of the data source for CRBs and more publicity about CRBs presence in Ghana be embarked upon to improve the operations of both banks and CRBs.

Suggested Citation

  • Baah Aye Kusi & Elikplimi Komla Agbloyor & Vera Ogeh Fiador & Kofi Achampong Osei, 2016. "Credit Referencing Bureaus and Bank Credit Risk: Evidence from Ghana," The African Finance Journal, Africagrowth Institute, vol. 18(2), pages 69-92.
  • Handle: RePEc:afj:journl:v:18:y:2016:i:2:p:69-92
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    Cited by:

    1. Baah Kusi & Elikplimi Agbloyor & Agyapomaa Gyeke‐Dako & Simplice Asongu, 2022. "Financial sector transparency, financial crises and market power: A cross‐country evidence," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(4), pages 4431-4450, October.
    2. Kusi, Baah Aye & Agbloyor, Elikplimi Komla & Gyeke-Dako, Agyapomaa & Asongu, Simplice Anutechia, 2020. "Financial Sector transparency and net interest margins: Should the private or public Sector lead financial Sector transparency?," Research in International Business and Finance, Elsevier, vol. 54(C).

    More about this item

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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