Assessment of Competition in the Zimbabwean Banking Sector since Dollarization

Kupukile Mlambo and Nebson Mupunga ()
Additional contact information
Nebson Mupunga: Reserve Bank of Zimbabwe

The African Finance Journal, 2018, vol. 20, issue 1, 1-23

Abstract: In this study we assess the degree of competition in the Zimbabwean banking sector since the adoption of dollarization in 2009 using bank-level quarterly data. We applied two methods to measure competition, namely, the Panzar-Rosse approach and the Lerner Index. Both methods suggest that banks in Zimbabwe operate under monopolistic conditions. The results from the Panzar–Rosse estimation generated an H-statistic of 0.416 for the period 2009-2016, while the Lerner index averaged 0.3 for the industry over the sample period. The Lerner index however, show an increase of market power over time, suggesting that competition in the Zimbabwean banking sector has generally eroded, especially with bank closures and consolidations post 2012. In terms of the factors influencing competition, our results show the importance of capital regulations, profitability, bank size and market efficiency. Foreign entry also increases competition in the banking sector. Overall, the results underscore the need for the central bank to implement reforms in the banking sector that result in greater competition and welfare gains for the economy

Keywords: Dollarization; bank competition; Panzar-Rose; Lerner Index; Zimbabwean banking (search for similar items in EconPapers)
JEL-codes: D40 G21 L10 (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.journals.co.za/ej/ejour_finj.html (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:afj:journl:v:20:y:2018:i:1:p:1-23

Access Statistics for this article

More articles in The African Finance Journal from Africagrowth Institute Contact information at EDIRC.
Bibliographic data for series maintained by Kirk De Doncker ().