Benchmarking Banking Sector Efficiency Across Regional Blocks in Sub-Saharan Africa: What Room for Policy?
IMF Working Papers, February 26, 2013
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- Benchmarking Banking Sector Efficiency Across Regional Blocks in Sub-Saharan Africa: What Room for Policy?
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Bibliographic details
- Authors: Francois Boutin-Dufresne, Santiago Peña, Oral Williams, Tomasz A. Zawisza
- Published: February 26, 2013
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781557753304.001
Overview and authorship
- Title: Benchmarking Banking Sector Efficiency Across Regional Blocks in Sub-Saharan Africa: What Room for Policy?
- Authors: Francois Boutin-Dufresne, Santiago Peña, Oral Williams, Tomasz A. Zawisza
- Publication: IMF Working Papers
- Date: February 26, 2013
- Series: Working Paper No. 2013/051
- Issue: 051
- Volume: 2013
- Pages: 29
- DOI: https://doi.org/10.5089/9781557753304.001
- ISBN: 9781557753304
- ISSN: 1018-5941
Research focus and methodology
- Examines determinants of net interest margins in four regional blocks in Sub-Saharan Africa and one comparator block in the Eastern Caribbean.
- Uses bank-level data.
- Employs estimation techniques including system GMM (listed among Keywords).
Key empirical findings
- Higher net interest margins are associated with:
- High level of operating costs.
- High ratio of equity to total assets.
- High treasury bill interest rates.
- High operating costs correlate with:
- Low measures of institutional quality.
- Small size of bank operations.
- Evidence supports the view that market structure is partly responsible for high net interest margins in Sub-Saharan Africa.
- Region-specific result: If interpreted causally, the most important factors accounting for high interest margins in the East African Community, relative to other regions, are:
- High operating costs.
- High ratio of equity to total assets.
- Indirectly, institutional factors such as the rule of law.
Subject coverage and keywords
- Subjects: Banking, Econometric analysis, Estimation techniques, Financial institutions, Financial regulation and supervision, Loan loss provisions, Loans, Stocks, Treasury bills and bonds
- Keywords: bank, bank characteristic, bank equity, economies of scale, Estimation techniques, Financial intermediation efficiency, institutions., interest margin, loan, Loan loss provisions, Loans, market structure, net interest margins, operating cost, SSA bank, Stocks, Sub-Saharan Africa, system GMM, Treasury bills and bonds, WP
Implications for policy (as presented in the paper)
- Interpreting associations causally suggests policy focus on:
- Reducing operating costs to lower net interest margins.
- Understanding the role of bank capital structure (ratio of equity to total assets) in interest margins.
- Improving institutional quality (for example, rule of law) which may indirectly reduce operating costs and margins.
- Market structure considerations should be part of policy discussions because market concentration appears partly responsible for high margins.
Source: IMF Working Paper — Benchmarking Banking Sector Efficiency Across Regional Blocks in Sub-Saharan Africa: What Room for Policy? (Working Paper No. 2013/051, February 26, 2013).
Content in this bundle
- _wp1351 - Appendix I