Analysis of the quiet life hypothesis implications in the WAEMU banking sector
Hodonou Dannon and
African Development Review, 2021, vol. 33, issue 3, 533-545
This paper investigates the relationship between market power and cost efficiency for a sample of 63 banks in the West African Economic and Monetary Union (WAEMU) from seven countries over the period of 2004–2016. Our empirical methodology relies on a panel data analysis. Our results show that an increase in market power reduces banking efficiency in the WAEMU countries, and therefore suggest that competition in the banking sector improves cost efficiency. These findings are consistent with the quiet life hypothesis. However, our nonlinear investigation indicates that beyond a specific threshold of competition, this latter deteriorates the cost efficiency of banks, thus confirming the efficient structure hypothesis. These results indicate the efficiency improvement of the banking system in the WAEMU countries by the control of operating costs. Moreover, the central bank and the banking regulators must increase their supervision over the most competitive banks of the WAEMU.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bla:afrdev:v:33:y:2021:i:3:p:533-545
Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1017-6772
Access Statistics for this article
African Development Review is currently edited by John C. Anyanwu, Hassan Aly and Kupukile Mlambo
More articles in African Development Review from African Development Bank Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().