Financial Sector Competition in West African Economic and Monetary Union

Florian Leon

No 201214, Working Papers from CERDI

Abstract: This paper investigates the degree of competition in the WAEMU financial industry over the period 2002-2007 using firm-level data (591 year-firm observations). Market structure analysis, the Panzar-Rosse model and conjectural variation are applied to assess the level of competition. The results show that the prevailing market structure in the WAEMU financial industry is concentrated and financial intermediaries operate under imperfect competition. Although competition was fierce during the mid-2000s, the level of competition has remained limited. Moreover, apart from Benin and Mali, the structural and non-structural approaches are closely related, contrary to previous findings, which have some implications for the empirical studies. Finally, a common regulatory framework does not imply similar level of competition. The presence of non-legal barriers is the most plausible explanation of these large differences between WAEMU members.

Keywords: Banking competition; Market structure; Panzar-Rosse model; Conjectural variation model; WAEMU (search for similar items in EconPapers)
JEL-codes: D4 G21 L11 L13 O55 (search for similar items in EconPapers)
Pages: 41
Date: 2012
New Economics Papers: this item is included in nep-afr
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Related works:
Working Paper: Financial Sector Competition in West African Economic and Monetary Union (2012)
Working Paper: Financial Sector Competition in West African Economic and Monetary Union (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:cdi:wpaper:1341

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