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Do Pan-African banks have the best of both worlds?

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  • Zins, Alexandra
  • Weill, Laurent
Abstract
There has been a large expansion of foreign banks in Africa over the last two decades, with Pan-African banks playing a key role in this phenomenon. This paper questions if this development is beneficial for bank efficiency in African countries by investigating if Pan-African banks are more efficient than other types of foreign and domestic banks. We analyse the relation between ownership type and bank efficiency on a large sample of African banks covering 39 African countries over the period 2002–2015. We find that Pan-African banks are the most efficient banks in the African banking industries. We explain this finding with the fact that these banks combine the best of both worlds: they have the global advantages of foreign banks and the home field advantages of domestic banks. They are therefore able to be more efficient than both foreign banks from developed countries and domestic banks. This suggests that favouring the entry of Pan-African banks would be beneficial to bank efficiency in Africa.

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  • Zins, Alexandra & Weill, Laurent, 2018. "Do Pan-African banks have the best of both worlds?," Economic Systems, Elsevier, vol. 42(4), pages 665-681.
    • Handle: RePEc:eee:ecosys:v:42:y:2018:i:4:p:665-681
    DOI: 10.1016/j.ecosys.2018.06.001
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    3. El Moussawi, Chawki & Goutte, Stéphane & Kouki, Imen & Obeid, Hassan, 2024. "Assessing the impact of the expansion of pan-African banks and the institution’s quality on African banking stability," Research in International Business and Finance, Elsevier, vol. 70(PA).
    4. Léon, Florian & Zins, Alexandra, 2020. "Regional foreign banks and financial inclusion: Evidence from Africa," Economic Modelling, Elsevier, vol. 84(C), pages 102-116.
    5. Matabaro Borauzima, Luc & Niyondiko, Dominique & Muller, Aline, 2021. "Does cross-border banking enhance competition and cost efficiency? Evidence from Africa," Journal of Multinational Financial Management, Elsevier, vol. 62(C).
    6. Canan Yildirim & Adnan Kasman & Fazelina Sahul Hamid, 2021. "Impact of foreign ownership on market power: Do regional banks behave differently in ASEAN countries?," Post-Print hal-03419478, HAL.
    7. Beni Kouevi Gath, 2021. "Credit Information Sharing and Bank Stability: Evidence from SSA Countries," Working Papers CEB 21-009, ULB -- Universite Libre de Bruxelles.
    8. Yildirim, Canan & Kasman, Adnan & Hamid, Fazelina Sahul, 2021. "Impact of foreign ownership on market power: Do regional banks behave differently in ASEAN countries?," Economic Modelling, Elsevier, vol. 105(C).
    9. Albaity, Mohamed & Noman, Abu Hanifa Md. & Saadaoui Mallek, Ray & Al-Shboul, Mohammad, 2022. "Cyclicality of bank credit growth: Conventional vs Islamic banks in the GCC," Economic Systems, Elsevier, vol. 46(1).
    10. Vanwalleghem, Dieter & Yildirim, Canan & Mukanya, Anthony, 2020. "Leveraging local knowledge or global advantage: Cross border bank mergers and acquisitions in Africa," Emerging Markets Review, Elsevier, vol. 42(C).

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    More about this item

    Keywords

    Africa; Bank; Efficiency; Ownership;
    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
    • N27 - Economic History - - Financial Markets and Institutions - - - Africa; Oceania

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