Discernible differences in the building façades, but not in the productivity numbers: A comparison between domestic and foreign banks in North Africa

Foreign banks are often considered as potential drivers of new technologies, management techniques and expertise transfer in the host countries which give then a potential advantage in terms of productivity. This argument may be reinforced when bank parents belong to developed country banking systems. To test these prior assumptions, we investigate the evolution of total productivity change by ownership structure using an homogeneous sample of commercial banks in North Africa over the period 2002–2018. Total factor productivity change is then decomposed into three components, technical change, efficiency change and scale change using stochastic frontier models. We find that productivity growth rates varies across countries between 0.6 % per year on average to 4.1 % in the studied banking systems and most of the important source of this growth is economies of scales. By contrast, foreign banks does not prove to be neither more productive nor a potential driver of technological or efficiency transfer in the studied region.