IDEAS home Printed from https://ideas.repec.org/a/afj/journl/v20y2018i1p1-23.html
   My bibliography  Save this article

Assessment of Competition in the Zimbabwean Banking Sector since Dollarization

Author

Listed:
  • Kupukile Mlambo
  • Nebson Mupunga

    () (Reserve Bank of Zimbabwe)

Abstract

In this study we assess the degree of competition in the Zimbabwean banking sector since the adoption of dollarization in 2009 using bank-level quarterly data. We applied two methods to measure competition, namely, the Panzar-Rosse approach and the Lerner Index. Both methods suggest that banks in Zimbabwe operate under monopolistic conditions. The results from the Panzar–Rosse estimation generated an H-statistic of 0.416 for the period 2009-2016, while the Lerner index averaged 0.3 for the industry over the sample period. The Lerner index however, show an increase of market power over time, suggesting that competition in the Zimbabwean banking sector has generally eroded, especially with bank closures and consolidations post 2012. In terms of the factors influencing competition, our results show the importance of capital regulations, profitability, bank size and market efficiency. Foreign entry also increases competition in the banking sector. Overall, the results underscore the need for the central bank to implement reforms in the banking sector that result in greater competition and welfare gains for the economy

Suggested Citation

  • Kupukile Mlambo & Nebson Mupunga, 2018. "Assessment of Competition in the Zimbabwean Banking Sector since Dollarization," The African Finance Journal, Africagrowth Institute, vol. 20(1), pages 1-23.
  • Handle: RePEc:afj:journl:v:20:y:2018:i:1:p:1-23
    as

    Download full text from publisher

    File URL: http://www.journals.co.za/ej/ejour_finj.html
    Download Restriction: no

    More about this item

    Keywords

    Dollarization; bank competition; Panzar-Rose; Lerner Index; Zimbabwean banking;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:afj:journl:v:20:y:2018:i:1:p:1-23. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kirk De Doncker). General contact details of provider: http://edirc.repec.org/data/afrgrza.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.