Credit Risk and Bank Competition in Sub-Saharan Africa

Michael Brei, Luc Jacolin and Alphonse Noah

Post-Print from HAL

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.

Date: 2020
Note: View the original document on HAL open archive server: https://hal.science/hal-02887007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published in Emerging Markets Review, 2020, 44, ⟨10.1016/j.ememar.2020.100716⟩

Downloads: (external link)
https://hal.science/hal-02887007/document (application/pdf)

Related works:
Journal Article: Credit risk and bank competition in Sub-Saharan Africa (2020)
Working Paper: Credit risk and bank competition in Sub-Saharan Africa (2018)
Working Paper: CREDIT RISK AND BANK COMPETITION IN SUB-SAHARAN AFRICA (2018)
Working Paper: CREDIT RISK AND BANK COMPETITION IN SUB-SAHARAN AFRICA (2018)
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:hal:journl:hal-02887007

DOI: 10.1016/j.ememar.2020.100716

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().