Spillover and Competition Effects: Evidence from the sub-Saharan African Banking Sector
This paper examines the efficiency effects of foreign bank entry on domestic banks in sub- Saharan Africa during the period 1999–2006. Using a recently compiled dataset on foreign bank presence, the competition and spillover effects of North–South, regional and nonregional South–South banks are distinguished. The results show that the competitive pressure on domestic banks' net interest margins emanates only from regional South–South banks. There is evidence of spillover effects from North-South and regional South-South banks on domestic banks. As domestic banks invest in foreign technologies, their overhead costs increase in the short-run. Non-regional South-South banks seem to have little effect on the efficiency of domestic banks.
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- Patrick Honohan & Thorsten Beck, 2007. "Making Finance Work for Africa," World Bank Publications, The World Bank, number 6626, May.
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- Lensink, Robert & Hermes, Niels, 2004. "The short-term effects of foreign bank entry on domestic bank behaviour: Does economic development matter?," Journal of Banking & Finance, Elsevier, vol. 28(3), pages 553-568, March.
- Heiko Hesse & Tigran Poghosyan, 2009. "Oil Prices and Bank Profitability; Evidence From Major Oil-Exporting Countries in the Middle East and North Africa," IMF Working Papers 09/220, .
- Claessens, Stijn & Demirguc-Kunt, Asl[iota] & Huizinga, Harry, 2001. "How does foreign entry affect domestic banking markets?," Journal of Banking & Finance, Elsevier, vol. 25(5), pages 891-911, May. Full references (including those not matched with items on IDEAS)
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