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Bank efficiency in Africa

Author

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  • Roseline Oluitan

    (Lagos State University, Nigeria)

Abstract

This study examines the efficiency of the financial sector in African countries. It aims to investigate if ìThe financial institutions are capable of distributing the economic resources efficiently. Empirical evidence supports a sound intermediation process and efficiency in the banking system (Vittas, 1991; Howard & Haynes, 2001). In this paper, the cost function is estimated with the use of a single-output and multi-input approach for the analysis. The output consists of loans, other earning assets and non-interest revenue which are used individually for the estimation. The input is deemed to be made up of capital, deposits and labour (overhead). The analysis is further extended by calculating the x-inefficiency which is found to be within the range of 24 - 26%. The study made postulations in respect of the causes for the inefficiency and the possible remedies. The study comprises of Commercial banks from about forty seven African countries for a period of ten years.

Suggested Citation

  • Roseline Oluitan, 2014. "Bank efficiency in Africa," Journal of Developing Areas, Tennessee State University, College of Business, vol. 48(2), pages 205-221, April-Jun.
    • Handle: RePEc:jda:journl:vol.48:year:2014:issue2:pp205-221
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    File URL: http://muse.jhu.edu/journals/journal_of_developing_areas/v048/48.2.oluitan.html
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    Citations

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    Cited by:

    1. Bakam Fotso & E. I Edoun, 2017. "Critical Assessment of Banking Institutions in South Africa," Journal of Economics and Behavioral Studies, AMH International, vol. 9(2), pages 6-21.
    2. Kennedy Ochuka & Kennedy Okiro & Fredrick Ogilo, 2024. "Effect of Efficiency on the Relationship between Organization Characteristics and Financial Performance of Commercial Banks in Kenya," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(7), pages 2613-2623, July.
    3. Jonas Ladime & Rayenda Khresna Brahmana, 2021. "Role of controlling shareholders on the performance of efficient African banks," African Development Review, African Development Bank, vol. 33(2), pages 316-328, June.

    More about this item

    Keywords

    Bank; Efficiency; Profit; and Africa;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • N27 - Economic History - - Financial Markets and Institutions - - - Africa; Oceania
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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