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Benchmarking Banking Sector Efficiency Across Regional Blocks in Sub-Saharan Africa: What Room for Policy?
Author:
Mr. Francois Boutin-Dufresne
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,
Santiago Peña
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Mr. Oral Williams null

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Mr. Tomasz A. Zawisza null

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Series:
IMF Working Papers
Volume/Issue:
Volume 2013: Issue 051
Language:
English
Publication Date:
26 Feb 2013
DOI:
https://doi.org/10.5089/9781557753304.001
ISBN:
9781557753304
ISSN:
1018-5941
Pages:
29
Keywords:
WP; market structure; bank; operating cost; loan; Financial intermediation efficiency; net interest margins; economies of scale; institutions.; interest margin; bank characteristic; system GMM; SSA bank; bank equity; Estimation techniques; Loans; Treasury bills and bonds; Loan loss provisions; Stocks; Sub-Saharan Africa
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper examines the determinants of net interest margins in four regional blocks in Sub-Saharan Africa and one comparator block in the Eastern Caribbean. Using bank-level data, we find that countries with a high level of operating costs, a high ratio of equity to total assets and high treasury bill interest rates have higher net interest margins. Moreover, high operating costs are associated with low measures of institutional quality and a small size of bank operations. We find support for the view that market structure is also partly responsible for high net interest margins in Sub-Saharan Africa. If interpreted causally, high operating costs and a high ratio of equity to total assets and, indirectly, institutional factors such as the rule of law, are the most important factors in accounting for high interest margins in the East African Community, relative to other regions.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund