Bank Competition in Kenya

Idi Jackson Mdoe (), Jacob O. Omolo () and Nelson H. Wawire ()
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Idi Jackson Mdoe: Kenyatta University
Jacob O. Omolo: Kenyatta University
Nelson H. Wawire: Kenyatta University

Journal of Industry, Competition and Trade, 2019, vol. 19, issue 1, No 5, 83-102

Abstract: Abstract This study investigates the level of competition among commercial banks in Kenya over the period 2001 to 2014. The study used a balanced panel data set from 36 commercial banks, the performance dynamics approach and the generalized method of moments to estimate the resulting dynamic panel models. The investigation established that the level of competition among commercial banks in Kenya is low and characterized by 93.9 per percent persistence in profitability. Arising from the study findings, it is important that the government intervenes to rectify the intermediation inefficiency occasioned by ineffectiveness of competition. It is also important that small sized banks in the sector voluntarily merge with other smaller banks in order to exert substantial competition to the large and medium sized banks.

Keywords: Exceptional bank profitability; Profit persistence; Intermediation inefficiency (search for similar items in EconPapers)
JEL-codes: G21 L11 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1007/s10842-018-0279-2

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