Banking competition in Africa: Subregional comparative studies

This paper examines the extent of banking competition in African subregional markets. A dynamic version of the Panzar-Rosse model is adopted beside the static model to assess the overall extent of banking competition in each subregional banking market over the period 2002 to 2009. Consistent with other emerging economies, the results suggest that African banks generally demonstrate monopolistic competitive behaviour. Although the evidence suggests that the static Panzar-Rosse H-statistic is downwards biased compared to the dynamic version, the competitive nature identified remains robust to alternative estimators.

► Competition in subregional African banks investigated. ► A dynamic Panzar-Rosse model adopted beside the static version for robustness. ► African subregional banking markets exhibit monopolistic competitive behaviour. ► Static Panzar-Rosse H-statistic downward biased. ► Evidence of monopolistic competition robust to choice of estimator.