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Competition in the banking industry: Empirical evidence from Ghana

Author

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  • Kofi Adjei-Frimpong
  • Christopher Gan
  • Baiding Hu

Abstract

Ghana’s banking industry has undergone considerable transformation since 1988 as a result of the gradual but steady implementation of financial service reforms. The main purpose of implementing the financial reforms is to build a competitive and stable banking industry to enhance banks’ efficiency and ultimately economic growth and development. Using annual (panel) data spanning from 2001 to 2010, this study investigates the degree of bank competition and their determinants in Ghana’s banking indusrty using the fixed-effect model and two-step system GMM estimations. The results suggest that Ghana’s banking industry is competitively weak. The findings also indicate that market power persistently exists in Ghana’s banking industry. Furthermore, bank capitalization reduces bank market power and therefore increases bank competition in Ghana. However, there is no indication that bank size, fee income, loan loss provision ratio and rate of inflation have influence on bank competition in Ghana.

Suggested Citation

  • Kofi Adjei-Frimpong & Christopher Gan & Baiding Hu, 2016. "Competition in the banking industry: Empirical evidence from Ghana," Journal of Banking Regulation, Palgrave Macmillan, vol. 17(3), pages 159-175, July.
    • Handle: RePEc:pal:jbkreg:v:17:y:2016:i:3:p:159-175
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    Citations

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    Cited by:

    1. Amit Ghosh, 2018. "What Drives Banking Industry Competition in Developing Countries?," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 43(4), pages 1-20, December.
    2. Zhiheng Li & Shuangzhe Liu & Fanda Meng & Milind Sathye, 2019. "Competition in the Indian Banking Sector: A Panel Data Approach," JRFM, MDPI, vol. 12(3), pages 1-16, August.
    3. Man Ha & Christopher Gan & Cuong Nguyen & Patricia Anthony, 2021. "Self-Organising (Kohonen) Maps for the Vietnam Banking Industry," JRFM, MDPI, vol. 14(10), pages 1-18, October.
    4. Koddenbrock, Kai & Kvangraven, Ingrid Harvold & Sylla, Ndongo Samba, 2020. "Beyond Financialisation: The Need for a Longue Durée Understanding of Finance in Imperialism," OSF Preprints pjt7x, Center for Open Science.
    5. MAMADOU ASNGAR, Thierry & ONGO NKOA, Bruno Emmanuel & WIRAJING, Muhamadu Awal Kindzeka, 2022. "The Effect Of Banking Competition On Financial Stability In Central African Economic And Monetary Community Zone," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 26(1), pages 23-50, March.
    6. Ferdaous Bahri & Taher Hamza, 2020. "The Impact of Market Power on Bank Risk-Taking: an Empirical Investigation," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 11(3), pages 1198-1233, September.
    7. Evans Te & Lawrance Asari Boadi & Philomena Dadzie, 2022. "Drivers of Banks Financial Performance," International Journal of Economics and Financial Issues, Econjournals, vol. 12(4), pages 34-39, July.

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