Financial integration and bank profitability in five regional economic communities in Africa

Kannyiri Banyen and Nicholas Biekpe

International Journal of Emerging Markets, 2020, vol. 16, issue 3, 468-491

Abstract: Purpose - This paper examines the effect of bothde jureandde factomeasures of financial integration on bank profitability in five regional economic communities of Africa. Design/methodology/approach - Using panel data from 405 banks operating in 47 African countries across five regional economic communities over 2007–2014, the study constructs a composite measure of bank profitability. The study then employs the dynamic two-step system GMM estimation technique to test the effect of bothde jureandde factomeasures of financial integration on bank profitability in Africa and across five sub-regional markets. Findings - Overall, the results support a positive relationship between financial integration and overall bank profitability in Africa, except for the Arab Maghreb Union and Southern Africa Development Community. Practical implications - The findings of this study suggest that increased financial integration in Africa directly improves bank’s overall profitability and the variations among the sub-regional markets inform tailored policy initiatives. Originality/value - To the best of the authors' knowledge, this is the first study on Africa to employ a composite measure of bank profitability to assess its determinants. It is also the first to include both de facto and de jure financial integration measures in a single study. This is also the first largest comparative study on bank profitability in Africa.

Keywords: Financial integration; Bank profitability; Two-step system GMM; Africa; Sub-regional analysis; F36; F65; G21; N27 (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

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:eme:ijoemp:ijoem-08-2018-0435

DOI: 10.1108/IJOEM-08-2018-0435

Access Statistics for this article

International Journal of Emerging Markets is currently edited by Prof Ilan Alon

More articles in International Journal of Emerging Markets from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().