Credit Information Sharing and Loan Default in Developing Countries: The Moderating Effect of Banking Market Concentration and National Governance Quality

Fosu, Samuel; Danso, Albert; Agyei-Boapeah, Henry; Ntim, Collins G; Adegbite, Emmanuel

Abstract

Departing from the existing literature, which associates credit information sharing with improved access to credit in advanced economies, we examine whether credit information sharing can also reduce loan default rate for banks domiciled in developing countries. Using a large dataset covering 879 unique banks from 87 developing countries from every continent, over a nine-year period (i.e., over 6,300 observations), we uncover three new findings. First, we find that credit information sharing reduces loan default rate. Second, we show that the relationship between credit information sharing and loan default rate is conditional on banking market concentration. Third, our findings suggest that governance quality at the country level does not have a strong moderating role on the effect of credit information sharing on loan default rate.

Citation

Fosu, S., Danso, A., Agyei-Boapeah, H., Ntim, C. G., & Adegbite, E. (2020). Credit Information Sharing and Loan Default in Developing Countries: The Moderating Effect of Banking Market Concentration and National Governance Quality. Review of Quantitative Finance and Accounting, 55, 55–103. https://doi.org/10.1007/s11156-019-00836-1

• Journal Article Type: Article
• Acceptance Date: Aug 2, 2019
• Online Publication Date: Sep 9, 2019
• Publication Date: 2020-07
• Deposit Date: Aug 19, 2019
• Publicly Available Date: Sep 10, 2020
• Journal: Review of Quantitative Finance and Accounting
• Print ISSN: 0924-865X
• Electronic ISSN: 1573-7179
• Publisher: Springer Verlag
• Peer Reviewed: Peer Reviewed
• Volume: 55
• Pages: 55–103
• DOI: https://doi.org/10.1007/s11156-019-00836-1
• Keywords: Credit information sharing; Developing countries; Banking market concentration; Governance quality
• Public URL: https://nottingham-repository.worktribe.com/output/2446840
• Publisher URL: https://link.springer.com/article/10.1007/s11156-019-00836-1
• Additional Information: This is a post-peer-review, pre-copyedit version of an article published in Review of Quantitative Finance and Accounting. The final authenticated version is available online at: https://dx.doi.org/10.1007/s11156-019-00836-1