Banking Efficiency and Financial Development in Sub-Saharan Africa

Author/Editor:

Sandrine Kablan

Publication Date:

June 1, 2010

Electronic Access:

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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:

This study assesses the determinants of banking system efficiency in sub-Saharan Africa (SSA) and asks what, besides the degree of efficiency, explains the low level of financial development in the region. It uses stochastic frontier analysis to measure efficiency and a generalized method of moments system to explain financial development. SSA banks are found to be generally cost-efficient, but nonperforming loans undermine efficiency, which suggests that improvement in the regulatory and credit environments should improve efficiency. The political and the economic environment have held back financial development in SSA.

Series:

Working Paper No. 10/136

Subject:

English

Publication Date:

June 1, 2010

ISBN/ISSN:

9781455201198/1018-5941

Stock No:

WPIEA2010136

Format:

Paper

Pages:

25

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