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Bank Efficiency in Sub-Saharan African Middle Income Countries

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  • Chuling Chen
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    Abstract

    We use bank level data to study the efficiency of banks in Sub-Saharan African middle-income countries and provide possible explanations for the difference in the efficiency levels of banks. We find that banks, on average, could save 20-30 percent of their total costs if they were operating efficiently, and that foreign banks are more efficient than public banks and domestic private banks. Among the factors that could affect the efficiency levels are macroeconomic stability, depth of financial development, the degree of market competition, strong legal rights and contract laws, and better governance, including political stability and government effectiveness. Our findings point to the importance of policies that aim to build stronger institutions, promote more competition, and improve governance.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 09/14.

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    Length: 34
    Date of creation: 01 Jan 2009
    Date of revision:
    Handle: RePEc:imf:imfwpa:09/14

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    Related research

    Keywords: Banks; Developing countries; Economic conditions; Banking sector; Profits; banking; banking sectors; bank deposits; random error; statistics; bank deposit; statistic; correlation; standard deviation; bank regulation; standard error; normal distribution; minimization; equation; bank ownership; correlations; survey; equations; banking institutions; interest expense; banking service quality; logarithm; net interest margin; banking system; macroeconomic stability; bank entry; banking sector efficiency; banking service; bank profitability; optimization; bankruptcy law; significance level; banking systems; bank competition; banking activities; bank operations; bank reform; banking market; bank ratings; income statement; bank classification; econometrics; bank risk; bank policy; bank activities; exponential distribution; measurement errors; bank regulations; data envelopment analysis; bank performance;

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    Cited by:
    1. Anthony M. Simpasa, 2013. "Working Paper 168 - Competition and Market Structure in the Zambian Banking Sector," Working Paper Series 447, African Development Bank.

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