EFFICIENCY AND COMPETITION IN THE GHANAIAN BANKING INDUSTRY: A PANEL GRANGER CAUSALITY APPROACH

Kofi Adjei-Frimpong (), Christopher Gan () and Baiding Hu ()
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Kofi Adjei-Frimpong: Faculty of Commerce, Department of Accounting, Economics and Finance, PO Box 84, Lincoln University, Canterbury, New Zealand
Christopher Gan: Faculty of Commerce, Department of Accounting, Economics and Finance, PO Box 84, Lincoln University, Canterbury, New Zealand

Annals of Financial Economics (AFE), 2013, vol. 08, issue 01, 1-16

Abstract: This study examines the causal link between bank efficiency and bank competition. The study estimates bank competition with the Lerner index and bank cost efficiency with data envelopment analysis using annual data over the period 2001–2010. Using system generalized method of moments (system GMM) estimator, the results suggest that bank cost efficiency positively Granger-causes market power and hence causality negatively runs from bank cost efficiency to bank competition indicating that bank cost efficiency precedes bank competition. However, the reverse causality running from bank competition to bank cost efficiency is not supported.

Keywords: Efficiency; competition; system generalized method of moments; causality; data envelopment analysis; Lerner index; E44; E50; G21 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (5)

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DOI: 10.1142/S2010495213500048

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