The IUP Journal of Bank Management
Do Credit Information Sharing Schemes Matter to Bank Profitability? Evidence from Africa

Article Details
Pub. Date :Nov, 2019
Product Name : The IUP Journal of Bank Management
Product Type : Article
Product Code : IJIT11911
Author Name : Norman Adu Bamfo
Availability : YES
Subject/Domain : Finance
Download Format : PDF Format
No. of Pages : 40



This study investigates the profitability of banks in 41 African countries for the period 2004 to 2013 at different levels of credit information sharing using the depth of credit information index to measure the extent of credit information sharing in Africa. A fixed effects regression model was employed on unbalanced panel data from the Bankscope Database. The results indicate that credit information sharing through private credit bureaus significantly matters in enhancing bank profitability, while other bank-specific factors such as capital adequacy, credit risk and management/operational efficiency also significantly explain the variations in the profitability of banks in Africa. Government measures and policies are needed to provide an enabling financial environment that harnesses private information sharing to accelerate growth and improve bank profitability.


Financial intermediation through the banking system plays a pivotal role in the growth and development of most economies (Schumpeter, 1911), in that, the various functions that banks perform, such as mobilization of savings, evaluation of projects, resource allocation, management of risk, monitoring of managers and facilitation of transactions (Easterly and Levine, 1997), cannot be overemphasized.

Hitherto, research (see Nissanke and Aryeetey, 2006; Flamini, 2009; Francis, 2013; and Fosu, 2014) on bank profitability in the region of Africa has been a concern, attracting considerable and further attention among scholars, academics and practitioners (Fujii et al., 2014). The significance of financial institutions and their stability is due to their ability to mitigate problems of economies of scale in information gathering and the allocation of risks under asymmetric information (Agenor, 2000).


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