Bank Efficiency in Sub-Saharan African Middle Income Countries

January 1, 2009

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Format: Chicago

Chuling Chen. Bank Efficiency in Sub-Saharan African Middle Income Countries, (USA: International Monetary Fund, 2009) accessed September 19, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

We use bank level data to study the efficiency of banks in Sub-Saharan African middle-income countries and provide possible explanations for the difference in the efficiency levels of banks. We find that banks, on average, could save 20-30 percent of their total costs if they were operating efficiently, and that foreign banks are more efficient than public banks and domestic private banks. Among the factors that could affect the efficiency levels are macroeconomic stability, depth of financial development, the degree of market competition, strong legal rights and contract laws, and better governance, including political stability and government effectiveness. Our findings point to the importance of policies that aim to build stronger institutions, promote more competition, and improve governance.

Subject: Bank deposits, Banking, Commercial banks, Competition, Financial institutions, Financial markets, Financial services, Foreign banks, Legal support in revenue administration, Revenue administration

Keywords: Africa, Bank, Bank deposits, Banking sector, Commercial banks, Competition, Cost efficiency, Efficiency analysis, Efficiency frontier, Efficiency level, Efficiency score, Foreign banks, Input price, Legal support in revenue administration, Market structure, Minimization problem, Stochastic frontier analysis, Sub-Saharan Africa, WP

Publication Details

Pages:

34
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2009/014
Stock No:

WPIEA2009014
ISBN:

9781451871616
ISSN:

1018-5941

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