Bank Efficiency in Sub-Saharan African Middle Income Countries

Author/Editor:

Chuling Chen

Publication Date:

January 1, 2009

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

We use bank level data to study the efficiency of banks in Sub-Saharan African middle-income countries and provide possible explanations for the difference in the efficiency levels of banks. We find that banks, on average, could save 20-30 percent of their total costs if they were operating efficiently, and that foreign banks are more efficient than public banks and domestic private banks. Among the factors that could affect the efficiency levels are macroeconomic stability, depth of financial development, the degree of market competition, strong legal rights and contract laws, and better governance, including political stability and government effectiveness. Our findings point to the importance of policies that aim to build stronger institutions, promote more competition, and improve governance.

Series:

Working Paper No. 2009/014

Subject:

Bank deposits Banking Commercial banks Competition Financial institutions Financial markets Financial services Foreign banks Legal support in revenue administration Revenue administration

English

Publication Date:

January 1, 2009

ISBN/ISSN:

9781451871616/1018-5941

Stock No:

WPIEA2009014

Pages:

34

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