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Bank Concentration and Interest Rate Margin in WAEMU Zone

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  • Yao Seraphin Prao
  • Eugene Kamalan

Abstract

The objective of this paper is to analyse the impact of banking concentration on bank margin. We adapt the specification of [Corvoisier, S., & Gropp, R. (2002). Bank concentration and retail interest rates. Journal of Banking and Finance, 26, 2155–2189] to introduce the number of agencies in capital cities and provinces. We then show that in the short term, only the big four banks have a negative influence on net interest margins in the WAEMU zone. In the long term, the number of agencies in provinces and banking risks are positively linked to bank margin. The policy of opening agencies in provinces as well as credit risk contribute to increasing the cost of long-term credit in the WAEMU zone.

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  • Yao Seraphin Prao & Eugene Kamalan, 2019. "Bank Concentration and Interest Rate Margin in WAEMU Zone," International Economic Journal, Taylor & Francis Journals, vol. 33(3), pages 493-508, July.
    • Handle: RePEc:taf:intecj:v:33:y:2019:i:3:p:493-508
    DOI: 10.1080/10168737.2019.1585903
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