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Competition and Stability of Sub-Saharan African Commercial Banks; a GMM Analysis

Joseph Olorunfemi Akande () and Farai Kwenda ()
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Joseph Olorunfemi Akande: University of KwaZulu-Natal
Farai Kwenda: University of KwaZulu-Natal

Acta Universitatis Danubius. OEconomica, 2017, issue 13(2), 122-138

Abstract: Competition and stability relationship have continued to be debated around the world with mixed results. Our mission is to test how this relationship subsist in SSA region commercial banks in the light of competition-stability and competition-fragility views using the generalised Methods of moment. We studied 440 commercial banks in 37 SSA countries over the periods of 2006-2015. The results provide evidences that support competition-fragility views over the study periods in the SSA region as we found Lerner index, our competition measure and score, the stability measure to be consistently strong and negatively related over the static and dynamic regression analysis that we carried out. While competition may be good as argued, and found in some other quarters, the policy implication of this study is for policy makers, regulators and practitioners alike to tread with caution in dealing with issues of competition given its potential to destabilise the system.

Keywords: Bank stability; solvency risk; cointegration, bank performance; South Africa (search for similar items in EconPapers)
Date: 2017
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