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Business and Economics > Investments: Stocks

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  • Type: Journal Issue x
  • Equatorial Guinea, Republic of x
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Cover IMF Working Papers
The Determinants of Commercial Bank Profitability in Sub-Saharan Africa
Valentina Flamini
,
Miss Liliana B Schumacher
, and
Mr. Calvin A McDonald
Bank profits are high in Sub-Saharan Africa (SSA) compared to other regions. This paper uses a sample of 389 banks in 41 SSA countries to study the determinants of bank profitability. We find that apart from credit risk, higher returns on assets are associated with larger bank size, activity diversification, and private ownership. Bank returns are affected by macroeconomic variables, suggesting that macroeconomic policies that promote low inflation and stable output growth does boost credit expansion. The results also indicate moderate persistence in profitability. Causation in the Granger sense from returns on assets to capital occurs with a considerable lag, implying that high returns are not immediately retained in the form of equity increases. Thus, the paper gives some support to a policy of imposing higher capital requirements in the region in order to strengthen financial stability.
Keywords:
WP; bank profitability; bank return; bank entry barrier; bank risk; Banks; credit risk; market structure; SSA bank; bank performance; activity diversification; bank characteristic; bank spread; macroeconomic risk factors; proxy bank size; Bank soundness; Stocks; Personal income; Inflation; Sub-Saharan Africa
Cover Policy Papers
Quota and Voice Reform - Stocktaking and Further Considerations, Statistical Appendices I and II, Statement by the Managing Director, and Summing Up of the Board Meeting
International Monetary Fund
At its Spring Meeting, the IMFC reiterated the importance of implementing the program of quota and voice reforms in line with the timetable set out by the Board of Governors in Singapore. The Committee welcomed the initial informal Board discussions on a new quota formula and stressed the importance of agreeing on a new formula, which should be simple and transparent and should capture members’ relative positions in the world economy. It noted that this reform would result in higher shares for dynamic economies, many of which are emerging market economies, whose weight and role in the global economy have increased. The Committee also stressed the importance of enhancing the voice and participation of low-income countries, a key issue for which is an increase in basic votes, at a minimum preserving the voting share of low-income countries. The Committee called on the Executive Board to continue its work on the reform package as a matter of priority.
Keywords:
PP; IMF document; PPP GDP; document; GDP; GDP blend; quota share; voice reform process; Purchasing power parity; Market exchange rates; International banking; Exchange rates; Gold; Global; Africa; Middle East; Western Hemisphere; Asia and Pacific