Paper

The Role of ICT in Reducing Information Asymmetry for Financial Access

Findings from research on 53 African countries during a 7-year period
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Information and communication technology (ICT) has been recently documented to increase information sharing between market participants in various sectors of developing countries. Some advantages have included reduced marketing cost and increased market participation and reduction of information asymmetry.

This study assesses the role of ICT in complementing private credit bureaus (PCB) and public credit registries (PCR) in reducing information asymmetry for financial access. The study investigates a panel of 53 African countries for the period 2004–2011, with data from the Financial Development and Structure Database (FDSD) and African Development Indicators (ADI) of the World Bank. The two main financial indicators are from the FDSD.

The study establishes the following findings:

  • Financial access: 
    • The marginal effects from interactions between ICT and PCR (PCB) are consistently positive (negative); 
    • Net effects from interactions are negative with the higher magnitude from PCR;
    • Only thresholds corresponding to interactions between PCR and internet penetration are within range.
  • Financial allocation efficiency reveal positive marginal and net effects exclusively for mobile phones and PCR;
  • Allocation efficiency may be constrained by increasing financial deposits.

About this Publication

By Moulin, B. , Asongu, S.
Published