Competitive Condition of Sub-Saharan Africa Commercial Banks

Abstract

Abstract. This study assesses the competitive environment and the determinants of the Sub-Saharan Africa commercial banking sectors. We used the Lerner index that is generally acknowledged as the best at estimating the bank level competition and the Generalised Method of Moments (GMM) to study 440 commercial banks for the period 2006 to 2015. We found a monopolistic competitive banking market. We also observed that competition is driven by the level of bank capital including some bank specific variables. Hence, we concluded that the banking market of the SSA region is contestable and competitive. As such, we recommend, among other things, that policy makers should device measures to ensure an ongoing competitive banking environment while stimulating other economic variables to complement this feat. JEL classification: G21, L10

Dividend Payout, Retention Policy and Financial Performance in Commercial Banks: Any Causal Relationship?

“…Therefore, annual/ yearly data were collected from 250 commercial banks' financial profile with up-to-date data available in BankScope database by Fitch/ IBCA Bureau Van Dijk covering the period 2006 to 2015. As recently noted by Beck, Demirgüç-Kunt, and Maksimovic (2004), Houston, Lin, Lin, and Ma (2010), Akande and Kwenda (2017), when conducting research with focus on banking sector, BankScope is considered as the most reliable, comprehensive and appropriate database because it accounts for over 90% of all country's banklevel data. The fact that data was sourced from this reputable database justifies the reliability of the data used for this study.…”

“…The SSA countries considered in this study excludes those regarded as outliers such as South Africa and Mauritius due to their highly competitive and sophisticated banking system (Beck & Cull, 2013). Also, countries such as such as democratic republic of Congo, Comoros, Guinea-Bissau, Sao Tome and Principle and others with lack of data due to the effect of war were excluded because of dearth and the paucity of data (Akande & Kwenda, 2017;Flamini, Schumacher, & McDonald, 2009 Mozambique, Namibia, Niger, Nigeria, Rwanda, Seychelles, Senegal, Swaziland, Togo, Tanzania, Uganda and Zambia. These countries are bank-based economies in which commercial banking constitute more than 70% of their financial system asset on the average.…”

“…These countries are bank-based economies in which commercial banking constitute more than 70% of their financial system asset on the average. They are impoverished and operate under unique economic and banking conditions characteristics such as weak creditors right, underdeveloped/ critical infrastructural facilities, high inflation, poverty, external shocks, high concentration, shallow financial system and non-adherence to the global regulatory requirements in detail (Akande & Kwenda, 2017;Allen et al, 2014;Flamini et al, 2009).…”

Competition and commercial banks risk-taking: evidence from Sub-Saharan Africa region

“…Our major preoccupation, however, is to investigate, using commercial banks data in the SSA region, if the inverse relationship between competition and stability, as found by Akande and Kwenda (2017), epitomises risk-taking attitude of banks.…”

Nexus of Market Risk, Dividend Policy and Commercial Banks’ Performance in Sub-Saharan Africa

“…The SSA countries considered in this study exclude those regarded as outliers such as South Africa and Mauritius due their highly competitive and sophisticated banking systems (Beck, Cull, 2013). Countries such as such as the Democratic Republic of Congo, Comoros, Guinea-Bissau, Sao Tome and Principle and that lacked data due to the effects of war were also excluded (Akande, Kwenda, 2017;Flamini, Schumacher, McDonald, 2009). The countries selected are bank-based economies in which commercial banking holds more than 70% of financial system assets on average.…”