IDEAS home Printed from https://ideas.repec.org/a/wly/ijfiec/v23y2018i1p19-28.html
   My bibliography  Save this article

Does credit information sharing affect funding cost of banks? Evidence from African banks

Author

Listed:
  • Baah Aye Kusi
  • Mary Opoku†Mensah

Abstract

This study takes advantage of the lack of empirical studies on the effect of credit information sharing and funding cost of banks and investigates credit information sharing and bank funding cost in Africa between 2006 and 2012. Employing a two†step generalized method of moments regression of 233 banks in 17 African countries, the study provides new revelations. The study shows that the quality of credit information shared is key and persistent in reducing funding cost of banks. Again, the study confirms that the coverage of private credit bureaus significantly reduced bank funding cost whereas no such evidence was found for coverage of public credit registries. Further, although the study found evidence to support that the presence of credit information reduces bank funding cost, no evidence was found to support that countries that use both private credit bureaus and public credit registries are able to reduce funding cost of banks in Africa. From these results, it is evident that credit information sharing presence, coverage, and quality reduces funding cost in Africa. For policy recommendations, policymakers and bank boards must team up and set up credit information sharing institutions to help reduce information asymmetry and funding cost in countries that do not share credit information. Also, the introduction and establishment of credit information sharing must be geared towards private bureaus as they are more effective in reducing funding cost of banks. Again, policymakers must enact laws and policies that deepen the coverage, depth, and quality of credit information shared so that the financial sector of Africa countries can realize the full potential of credit information sharing.

Suggested Citation

  • Baah Aye Kusi & Mary Opoku†Mensah, 2018. "Does credit information sharing affect funding cost of banks? Evidence from African banks," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 23(1), pages 19-28, January.
  • Handle: RePEc:wly:ijfiec:v:23:y:2018:i:1:p:19-28
    DOI: 10.1002/ijfe.1599
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/ijfe.1599
    Download Restriction: no

    File URL: https://libkey.io/10.1002/ijfe.1599?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:ijfiec:v:23:y:2018:i:1:p:19-28. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.interscience.wiley.com/jpages/1076-9307/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.interscience.wiley.com/jpages/1076-9307/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.