Bank Efficiency and Openness in Africa: Do Income Levels Matter?
AbstractThe business of this study is to investigate the role of openness in bank efficiency with respect to income levels. From a panel of 29 low and middle income African countries with data spanning from 1987 to 2008, we provide evidence that, openness (trade and financial) breeds less bank efficiency in low income countries. As for middle income countries, while financial openness has the same effect, results for trade openness are not significant. These findings justify the absence of a banking comparative advantage and consequently, the issue of over-liquidity resulting from low funding of credits by deposits. For policy implications, openness will increase the economic cost of banks in sampled countries. However, trade openness will be more detrimental than financial openness. More so, banks in middle income countries play a greater role in financing activities resulting from trade openness than those in low income countries.
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Bibliographic InfoArticle provided by Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante in its journal The Review of Finance and Banking.
Volume (Year): 04 (2012)
Issue (Month): 2 (December)
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Other versions of this item:
- Asongu Simplice, 2010. "Bank Efficiency and Openness in Africa: Do Income Levels Matter?," Working Papers 10/001, African Governance and Development Institute., revised 18 Dec 2011.
- Simplice A, Asongu, 2010. "Bank efficiency and openness in Africa: do income levels matter?," MPRA Paper 27011, University Library of Munich, Germany.
- F10 - International Economics - - Trade - - - General
- G20 - Financial Economics - - Financial Institutions and Services - - - General
- I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
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