Bank regulation and efficiency: What works for Africa?
Mouna Ben Dhaou and
Pietro Calice ()
Research in International Business and Finance, 2017, vol. 39, issue PA, 183-205
We use a new dataset on regulation and supervision in 42 countries to study the relationship between the regulatory framework and bank efficiency in Africa. Specifically, we examine how bank efficiency is influenced by requirements related to (i) Overall capital stringency, (ii) Restrictions on entry into banking, (iii) Restrictions on bank activities, (iv) Transparency requirements, (v) Restrictions on exit from banking, (vi) Liquidity and diversification requirements, (vii) Price controls (financial repression), (viii) Availability of financial safety nets and (ix) Quality of supervision. We find that increased availability of financial safety nets to have efficiency-enhancing effects for African banks. We also find that the effect of some bank regulation in Africa is highly dependent on the size and risk level of the bank. Specifically, our results suggest that more stringent restrictions on entry increase the efficiency of large banks, while restrictions on exit reduce the efficiency of small banks. Similarly, high-risk banks benefit, in terms of efficiency, from increased restrictions on entry whereas low risk banks do not benefit from increased restrictions on exit. Our results also suggest that small banks are the main losers from increased transparency requirements and price controls while more stringent capital requirements only enhance the efficiency of large banks and low risk banks. Overall, our findings support the argument that regulation should be adapted to the risk and size level of the institutions that are being regulated.
Keywords: Bank regulation; Bank efficiency; Risk; Africa (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
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:eee:riibaf:v:39:y:2017:i:pa:p:183-205
Access Statistics for this article
Research in International Business and Finance is currently edited by T. Lagoarde Segot
More articles in Research in International Business and Finance from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().