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The implication of banking competition: Evidence from African countries

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  • Kouki, Imen
  • Al-Nasser, Amjad

Abstract

This paper examines how bank efficiency and stability are affected by the market power in Africa. Our results show that the higher degree of market power is associated with high level of efficiency and profitability. The banks with more market power operating are able to be in command of the price and hence improve their profit. The market power has a benefit in both stability and risk. Hence, gain in market will increase the stability and reduce the risk for banking system. Our findings do not support the argument that competition should not be based on a “quiet life hypothesis”.

Suggested Citation

  • Kouki, Imen & Al-Nasser, Amjad, 2017. "The implication of banking competition: Evidence from African countries," Research in International Business and Finance, Elsevier, vol. 39(PB), pages 878-895.
  • Handle: RePEc:eee:riibaf:v:39:y:2017:i:pb:p:878-895
    DOI: 10.1016/j.ribaf.2014.09.009
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    6. Joseph Olorunfemi Akande & Farai Kwenda, 2017. "Competition and Stability of Sub-Saharan African Commercial Banks; a GMM Analysis," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 13(2), pages 122-138, April.
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