Economics at your fingertips  

Credit risk and bank competition in Sub-Saharan Africa

Michael Brei, Luc Jacolin and Alphonse Noah

Emerging Markets Review, 2020, vol. 44, issue C

Abstract: This paper investigates the relationship between bank competition and stability in Sub-Saharan Africa. Using financial statements on 221 banks from 33 countries over the period 2000–15, we provide evidence for a U-shaped relationship between bank competition and credit risk. Up to a certain threshold, higher levels of bank competition are associated with lower credit risk. Above this threshold, more competition increases credit risks as the positive effects of competition are outweighed by the adverse effects of rising competition. The optimal threshold appears to be higher for African banks compared to banks from developed countries. We also find that credit risk in Sub-Saharan Africa is not only related to macroeconomic determinants, such as growth, public debt, economic concentration and financial development, but also to the business and regulatory environment. In particular, bank risks appear to be lower in countries where credit registry coverage is higher and the tenure of supervisors is shorter.

Keywords: Bank competition; Credit risk; Bank stability; Africa (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Credit Risk and Bank Competition in Sub-Saharan Africa (2020)
Working Paper: Credit risk and bank competition in Sub-Saharan Africa (2018) Downloads
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:

DOI: 10.1016/j.ememar.2020.100716

Access Statistics for this article

Emerging Markets Review is currently edited by Jonathan A. Batten

More articles in Emerging Markets Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

Page updated 2022-08-07
Handle: RePEc:eee:ememar:v:44:y:2020:i:c:s1566014118303832