Banking Efficiency and Financial Development in Sub-Saharan Africa
June 1, 2010
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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.
Subject: Banking, Commercial banks, Financial sector development, Foreign banks, Loans
Keywords: bank, cost, environment affect bank cost-efficiency, WP
Pages:
25
Volume:
2010
DOI:
Issue:
136
Series:
Working Paper No. 2010/136
Stock No:
WPIEA2010136
ISBN:
9781455201198
ISSN:
1018-5941
