Technology-driven information sharing and conditional financial development in Africa

ABSTRACT

Information technology is increasingly facilitating mechanisms by which information asymmetry between lenders and borrowers in the financial sector can be reduced in order to enhance financial access for human and economic development in developing countries. We examine conditional financial development from ICT-driven information sharing in 53 African countries for the period 2004–2011, using contemporary and non-contemporary quantile regressions. ICT is measured with mobile phone penetration and internet penetration, whereas information-sharing offices are public credit registries and private credit bureaus. The following findings are established. First, there are positive effects with positive thresholds from ICT-driven information sharing on financial depth (money supply and liquid liabilities) and financial activity (at banking and financial system levels). Second, for financial intermediation efficiency, the positive effects from mobile-driven information sharing are apparent exclusively in certain levels of financial efficiency. Third, with regard to financial size, mobile-driven information sharing is positive with a negative threshold, whereas internet-driven information sharing is positive exclusively among countries in the bottom half of financial size. Positive thresholds are defined as decreasing negative or increasing positive estimated effects from information-sharing offices and vice versa for negative thresholds. Policy implications are discussed.

KEYWORDS:

• Information sharing
• financial development
• quantile regression
• technology
• Africa

Acknowledgements

The authors are indebted to the editor and referees for constructive comments.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes on contributors

Dr Simplice A. Asongu is Lead Economist and Director of the African Governance and Development Institute.

Prof. John C. Anyanwu is Lead Research Economist in the Macroeconomic Policy, Forecasting & Research Department of the African Development Bank.

Mrs Vanessa S. Tchamyou is Research Assistant at the African Governance and Development Institute and PhD Candidate at the University of Antwerp.

Notes

1 We use “information-sharing offices” interchangeably with “private credit bureaus” and “public credit registries” throughout the study.

2 “Mobile phone”-driven and mobile-driven are used interchangeably throughout the study.