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Financial inclusion and bank risk-taking: the effect of information sharing

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  • Marcelin, I.
  • Sun, W.
  • Teclezion, M.
  • Junarsin, E.

Abstract

We explore how information-sharing and financial inclusion influence bank risk in 84 countries from 1996 to 2020. Results show that greater information-sharing and financial inclusion lessen bank risk levels. The average bank's Z-score increases by 3.51–9.09%, attributable to enhanced information-sharing and higher financial inclusion. Inclusion-based deposit mobilization reduces bank probability of insolvency, suggesting that inclusion provides banks with cheap funding sources, reducing moral hazard problems and risky behaviors. Results remain robust across risk indicators and controlling for FinTech-based inclusion and COVID-19-induced risk. They support the hypothesis of increased social returns to transparency, information-sharing, and reaching out to financially excluded segments.

Suggested Citation

  • Marcelin, I. & Sun, W. & Teclezion, M. & Junarsin, E., 2022. "Financial inclusion and bank risk-taking: the effect of information sharing," Finance Research Letters, Elsevier, vol. 50(C).
    • Handle: RePEc:eee:finlet:v:50:y:2022:i:c:s1544612322003804
    DOI: 10.1016/j.frl.2022.103182
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    Cited by:

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    2. Zhang, Yujin & Ye, Shujun & Liu, Jie & Du, Lihong, 2023. "Impact of the development of FinTech by commercial banks on bank credit risk," Finance Research Letters, Elsevier, vol. 55(PA).
    3. Shuiwen Gao & Haifeng Gu & Guillermo Andres Buitrago & Habiba Halepoto, 2023. "Will Off-Balance-Sheet Business Innovation Affect Bank Risk-Taking under the Background of Financial Technology?," Sustainability, MDPI, vol. 15(3), pages 1-20, February.

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    More about this item

    Keywords

    Information-sharing; Financial inclusion; Bank risk; FinTech; COVID-19; Z-score;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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