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Does ownership affect the efficiency of african banks?

Author

Listed:
  • Catarina Figueira
  • J. G. Nellis
  • David Parker

    (Cranfield University, UK)

Abstract

In the last few years, there has been an extensive debate as to whether ownership matters for bank performance in less developed countries. This paper investigates whether privately-owned banks outperform state-owned banks and whether foreign ownership enhances bank performance. Based on a range of performance ratios as well as parametric and non-parametric estimations, the results show that in Africa, on average, privately-owned banks do not appear to outperform state-owned banks. However, where private ownership involves foreign ownership then this does seem to have a positive effect on bank performance. Both sets of results are affected by high variance in the data suggesting that in state-owned and privately-owned banks and in domestic and foreign-owned banks there are widely differing levels of efficiency. In addition, we also test for the effects of ownership taking into account environmental, including regulatory, variables. The study reports results for banking across Africa and in two separate regions, North Africa and sub-Saharan Africa. We also test for country-level effects.

Suggested Citation

  • Catarina Figueira & J. G. Nellis & David Parker, 2006. "Does ownership affect the efficiency of african banks?," Journal of Developing Areas, Tennessee State University, College of Business, vol. 40(1), pages 37-62, September.
    • Handle: RePEc:jda:journl:vol.40:year:2006:issue1:pp:37-62
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    Citations

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    Cited by:

    1. Wanke, Peter & Maredza, Andrew & Gupta, Rangan, 2017. "Merger and acquisitions in South African banking: A network DEA model," Research in International Business and Finance, Elsevier, vol. 41(C), pages 362-376.
    2. Feldmann, Horst, 2012. "Banking deregulation around the world, 1970s to 2000s: The impact on unemployment," International Review of Economics & Finance, Elsevier, vol. 24(C), pages 26-42.
    3. Carlos P. Barros & Qi Bin Liang & Nicolas Peypoch, 2014. "Technical Efficiency in the Angolan Banking Sector with the B-convexity Model," South African Journal of Economics, Economic Society of South Africa, vol. 82(3), pages 443-454, September.
    4. Catarina Figueira & Joseph Nellis, 2009. "Bank merger and acquisitions activity in the EU: much ado about nothing?," The Service Industries Journal, Taylor & Francis Journals, vol. 29(7), pages 875-886, July.
    5. Carlos Pestana Barros & Emanuel Reis Leão & Nkanga Pedro João Macanda & Zorro Mendes, 2016. "A Bayesian Efficiency Analysis of Angolan Banks," South African Journal of Economics, Economic Society of South Africa, vol. 84(3), pages 484-498, September.
    6. Zulkufly Ramly & Sok-Gee Chan & Mohd Zulkhairi Mustapha & Noor Sharoja Sapiei, 2017. "Women on boards and bank efficiency in ASEAN-5: the moderating role of the independent directors," Review of Managerial Science, Springer, vol. 11(1), pages 225-250, January.
    7. Luis Alberiko Gil-Alana & Carlos Barros & Dercio Mandlaze, 2017. "A performance assessment of Mozambique banks: a Bayesian stochastic frontier," Applied Economics, Taylor & Francis Journals, vol. 49(45), pages 4579-4587, September.
    8. Adugna Lemi & Ian Wright, 2020. "Exports, foreign ownership, and firm-level efficiency in Ethiopia and Kenya: an application of the stochastic frontier model," Empirical Economics, Springer, vol. 58(2), pages 669-698, February.
    9. Mutarindwa, Samuel & Siraj, Ibrahim & Stephan, Andreas, 2021. "Ownership and bank efficiency in Africa: True fixed effects stochastic frontier analysis," Journal of Financial Stability, Elsevier, vol. 54(C).
    10. du Toit, Elda & Cuba, Yolanda Z., 2018. "Cost and profit efficiency of listed South African banks pre and post the financial crisis," Research in International Business and Finance, Elsevier, vol. 45(C), pages 435-445.
    11. Barros, C.P. & Emrouznejad, Ali, 2016. "Assessing productive efficiency of banks using integrated Fuzzy-DEA and bootstrapping: A case of Mozambican banksAuthor-Name: Wanke, Peter," European Journal of Operational Research, Elsevier, vol. 249(1), pages 378-389.

    More about this item

    Keywords

    Africa; Banking Efficiency; Ownership; Performance;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • N26 - Economic History - - Financial Markets and Institutions - - - Latin America; Caribbean

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