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Bank Competition in Kenya

Author

Listed:
  • Idi Jackson Mdoe

    (Kenyatta University)

  • Jacob O. Omolo

    (Kenyatta University)

  • Nelson H. Wawire

    (Kenyatta University)

Abstract

This study investigates the level of competition among commercial banks in Kenya over the period 2001 to 2014. The study used a balanced panel data set from 36 commercial banks, the performance dynamics approach and the generalized method of moments to estimate the resulting dynamic panel models. The investigation established that the level of competition among commercial banks in Kenya is low and characterized by 93.9 per percent persistence in profitability. Arising from the study findings, it is important that the government intervenes to rectify the intermediation inefficiency occasioned by ineffectiveness of competition. It is also important that small sized banks in the sector voluntarily merge with other smaller banks in order to exert substantial competition to the large and medium sized banks.

Suggested Citation

  • Idi Jackson Mdoe & Jacob O. Omolo & Nelson H. Wawire, 2019. "Bank Competition in Kenya," Journal of Industry, Competition and Trade, Springer, vol. 19(1), pages 83-102, March.
    • Handle: RePEc:kap:jincot:v:19:y:2019:i:1:d:10.1007_s10842-018-0279-2
    DOI: 10.1007/s10842-018-0279-2
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    References listed on IDEAS

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    More about this item

    Keywords

    Exceptional bank profitability; Profit persistence; Intermediation inefficiency;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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