Effects of Banking Competition on Financial Stability: Cases of Some Countries in Sub-Saharan Africa
The African banking sector has undergone changes over the past two decades. During the 1980s, the banking sector in Africa was imposed by public banks, subject to restrictive regulations. Financial remission, modernization of institutions and regulations, and globalization have changed the face of financial systems across the region. Furthermore, the literature has identified that competition in the financial sector is important for the stability of the financial system (Boyd at.al, 2009). To this problem, the results obtained by the method of ordinary least squares (OLS) applied to 15 countries of sub-Saharan Africa during the period 2010-2014 showed that the Lerner variable which captures banking competition according to market power explains significantly financial stability with a positive coefficient of 9.96693. This means that when the competition in the banking sector increases by one the financial stability increases by 9.96693. These results corroborate our first “competition-stability” or “concentration-fragility” vision.
