Pan-African Banks: Opportunities and Challenges for Cross-Border Oversight
Departmental Papers, April 30, 2015
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- Pan-African Banks: Opportunities and Challenges for Cross-Border Oversight
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Bibliographic details
- Authors: Charles Enoch, Paul Henri Mathieu, Mauro Mecagni, Jorge I Canales Kriljenko
- Published: April 30, 2015
- Series: Departmental Papers
- DOI: https://doi.org/10.5089/9781498365444.087
Core overview
- Pan-African banks are expanding rapidly across the continent, creating cross-border networks and having a systemic presence in the banking sectors of many Sub-Saharan African countries.
- These banking groups foster financial development and economic integration, stimulate competition and efficiency, introduce product innovation and modern management and information systems, and bring higher skills and expertise to host countries.
- The rise of pan-African banks presents new challenges for regulators and supervisors because expanding networks can create new channels for transmission of macro-financial risks and spillovers across home and host countries.
- Enhanced cross-border cooperation on regulatory and supervisory oversight is needed to sustain gains from cross-border banking and avoid raising financial stability risks, in particular to support effective supervision on a consolidated basis.
- This paper takes stock of the development of pan-African banking groups; identifies regulatory, supervisory and resolution gaps; and suggests how the IMF can help the authorities address the related challenges.
Key findings
- Expansion effects:
- Positive: financial development, economic integration, competition, efficiency, product innovation, modern management and information systems, higher skills and expertise in host countries.
- Negative: emergence of new channels for transmission of macro-financial risks and spillovers across home and host countries as banking networks expand.
- Regulatory and supervisory challenges:
- Need for enhanced cross-border cooperation on regulatory and supervisory oversight.
- Need for effective supervision on a consolidated basis to manage systemic presence across multiple jurisdictions.
Policy recommendations and suggested actions
- Strengthen cross-border cooperation among home and host country authorities to manage spillovers and systemic risk.
- Develop and support frameworks for effective consolidated supervision of pan-African banking groups.
- Address identified regulatory, supervisory, and resolution gaps to preserve financial stability while maintaining benefits of cross-border banking.
- Leverage IMF support to help authorities design and implement necessary oversight enhancements and capacity building.
Content in this bundle
- Executive Summary