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Credit information sharing and bank loan pricing: do concentration and governance matter?

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posted on 2023-06-10, 03:30 authored by Samuel FosuSamuel Fosu, Albert Danso, Henry Agyei-Boapeah, Collins G Ntim
The development of credit information sharing schemes in developing countries has gained significant attention in recent times along with ongoing financial sector reforms. In this paper, we provide first-hand evidence of the effect of credit information sharing on credit intermediation cost in these countries, and consequently ascertain the extent to which the credit information sharing–credit intermediation cost nexus may be accentuated by banking market concentration and governance quality. Using a large dataset covering 272 banks from 27 African countries over the 2004–2012 period, we uncover four new findings. First, we find that credit information sharing does reduce credit intermediation cost. Second, we show that the relationship between credit intermediation cost and credit information sharing is conditional on banking market concentration. Third, our findings suggest that governance quality moderates the effect of credit information sharing on credit intermediation cost. Finally, we find that banking market concentration reduces credit intermediation cost, but the effect is moderated by credit information sharing. Overall, our findings suggest that credit information sharing may serve as a useful policy tool for achieving financial sector stability in developing countries.

History

Publication status

  • Published

File Version

  • Accepted version

Journal

International Journal of Finance and Economics

ISSN

1076-9307

Publisher

Wiley

Issue

4

Volume

26

Page range

5884-5911

Department affiliated with

  • Accounting and Finance Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2022-05-11

First Open Access (FOA) Date

2022-05-11

First Compliant Deposit (FCD) Date

2022-05-11

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