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RESEARCH ARTICLE

Financial sector transparency, financial crises and market power: A cross-country evidence

Baah Kusi,

Baah Kusi

Department of Finance, Central University College, Accra, Ghana

Department of Finance, University of Ghana Business School, Accra, Ghana

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Elikplimi Agbloyor,

Elikplimi Agbloyor

Department of Finance, University of Ghana Business School, Accra, Ghana

University of Stellenbosch Business School, Faculty of Economic and Management Sciences, Cape Town, South Africa

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Agyapomaa Gyeke-Dako,

Corresponding Author

Agyapomaa Gyeke-Dako

Department of Finance, University of Ghana Business School, Accra, Ghana

Correspondence

Agyapomaa Gyeke-Dako, Department of Finance, University of Ghana Business School, P.O. Box LG 78, Accra, Ghana.

Email: afuagyekedako@yahoo.co.uk

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Simplice Asongu,

Simplice Asongu

African Governance and Development Institute

Department of Economics University of South Africa

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First published: 20 December 2020
Citations: 1

Abstract

The study investigates how financial sector transparency moderates the influence of financial crises on bank market power across 75 economies between 2004 and 2014. Using two-step dynamic system generalized method of moments the study shows that while public sector-led financial sector transparency reduces bank market power, private sector-led financial sector transparency promotes bank market power given that private sector-led transparency gives financial cost advantage to financially sound banks to solidify the market power and dominance. Similarly, while financial crises reduce the market power of banks implying that during financial crises banks lose their market power, financial sector transparency promotes the negative effect of financial crises on bank market power. This implies that during financial crises, financial sector transparency whether enforced through private or public sector, boosts the weakening effect of financial crises on bank market power. These findings imply that regulators can rely on financial transparency to tame bank market power to enhance banking competitiveness. The findings and results are consistent even when country, time and continental effects are controlled for.

DATA AVAILABILITY STATEMENT

The data that support the findings of this study are openly available in World Development Indicators, Global Financial Development and World Governance Indicator databases at the following URL respectively: https://databank.worldbank.org/source/world-development-indicators; https://databank.worldbank.org/reports.aspx?source=global-financial-development; https://databank.worldbank.org/source/worldwide-governance-indicators.

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