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Information asymmetry and financial dollarization in sub-Saharan Africa

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  • Simplice Asongu
  • Ibrahim Raheem
  • Venessa Tchamyou

Abstract

Purpose - Financial dollarisation in sub-Saharan Africa (SSA) is most persistent compared to other regions of the world. The purpose of this paper is to complement the existing scant literature on dollarisation in Africa by assessing the role of information sharing offices (public credit registries and private credit bureaus) on financial dollarisation in 25 SSA countries for the period 2001-2012. Design/methodology/approach - The empirical evidence is based on ordinary least squares and generalised method of moments (GMM). Findings - The findings show that information sharing offices (which are designed to reduce information asymmetry) in the banking industry are a deterrent to dollarisation. The underpinning assumption that financial development reduces financial dollarisation is confirmed. Originality/value - There is scant literature on the relevance of information sharing offices in development outcomes in Africa. While the establishment of these offices in most countries in the continent began in 2004, scholarship on the importance of these offices in financial development is sparse.

Suggested Citation

  • Simplice Asongu & Ibrahim Raheem & Venessa Tchamyou, 2018. "Information asymmetry and financial dollarization in sub-Saharan Africa," African Journal of Economic and Management Studies, Emerald Group Publishing, vol. 9(2), pages 231-249, June.
  • Handle: RePEc:eme:ajempp:ajems-11-2017-0291
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    Cited by:

    1. Simplice A. Asongu & Nicholas M. Odhiambo, 2018. "ICT, Financial Access and Gender Inclusion in the Formal Economic Sector: Evidence from Africa," The African Finance Journal, Africagrowth Institute, vol. 20(2), pages 45-65.
    2. Simplice A. Asongu & Nicholas M. Odhiambo, 2020. "Finance, Governance and Inclusive Education in Sub-Saharan Africa," Working Papers 20/037, European Xtramile Centre of African Studies (EXCAS).
    3. Raheem, Ibrahim & Ajide, Kazeem, 2020. "The journey towards dollarization: the role of the tourism industry," MPRA Paper 105505, University Library of Munich, Germany.
    4. Asongu, Simplice A. & Nnanna, Joseph & Acha-Anyi, Paul N., 2020. "Finance, inequality and inclusive education in Sub-Saharan Africa," Economic Analysis and Policy, Elsevier, vol. 67(C), pages 162-177.
    5. Asongu, Simplice A. & Nnanna, Joseph & Acha-Anyi, Paul N., 2020. "Inequality and gender economic inclusion: The moderating role of financial access in Sub-Saharan Africa," Economic Analysis and Policy, Elsevier, vol. 65(C), pages 173-185.
    6. Asongu, Simplice & Nting, Rexon, 2020. "The Comparative Economics of Financial Access in Gender Economic Inclusion," MPRA Paper 107515, University Library of Munich, Germany.
    7. Simplice A. Asongu & Joseph Nnanna & Paul N. Acha-Anyi, 2020. "Inclusive Education for Inclusive Economic Participation: the Financial Access Channel," Research Africa Network Working Papers 20/019, Research Africa Network (RAN).
    8. Kazeem B. Ajide & Ibrahim D. Raheem & Simplice A. Asongu, 2018. "Dollarization and the “Unbundling†of Globalization in sub-Saharan Africa," AFEA Working Papers 18/029, African Finance and Economic Association (AFEA).
    9. Ajide, Kazeem B. & Raheem, Ibrahim D. & Asongu, Simplice A., 2019. "Dollarization and the “unbundling” of globalization in sub-Saharan Africa," Research in International Business and Finance, Elsevier, vol. 47(C), pages 398-409.
    10. Atenga, Eric Martial Etoundi & Mougoué, Mbodja, 2021. "Return and volatility spillovers to African currencies markets," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 73(C).

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    More about this item

    Keywords

    Africa; Openness; Information asymmetry; Dollarization; E31; E41; G20; O16; O55;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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