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

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  • Asongu, Simplice
  • Batuo, Enowbi
  • Nwachukwu, Jacinta
  • Tchamyou, Vanessa

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. First, from the Generalised Method of Moments 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 Quantile Regressions, 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 10th decile, 25th quartile and 90th decile 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 90th decile. Policy implications are discussed.

Suggested Citation

  • Asongu, Simplice & Batuo, Enowbi & Nwachukwu, Jacinta & Tchamyou, Vanessa, 2018. "Is information diffusion a threat to market power for financial access? Insights from the African banking industry," Journal of Multinational Financial Management, Elsevier, vol. 45(C), pages 88-104.
  • Handle: RePEc:eee:mulfin:v:45:y:2018:i:c:p:88-104
    DOI: 10.1016/j.mulfin.2018.04.005
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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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