Bank market power,ownership, regional presence and revenue diversification: Evidence from Africa |
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| Affiliation: | 1. School of Economics, Finance and Marketing, RMIT University, 445 Swanston Street, Melbourne, Victoria 3001, Australia;2. Department of Banking and Finance, Monash University, Caulfield Campus, Caulfield East, Victoria 3145, Australia;1. Department of Management, University of Bologna, Via Capo di Lucca, 34, 40126 Bologna, Italyn;2. CEFIN – Center for Research in Banking and Finance (CEFIN), Viale Berengario, 51, 41121 Modena, Italy;3. Department of Economics Marco Biagi, University of Modena and Reggio Emilia, Viale Berengario, 51, 41121 Modena, Italy |
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| Abstract: | We provide the first evidence that African banks with greater market power in lending and deposit markets earn more from non-traditional activities. This is consistent with dominant banks' ability to identify better non-traditional opportunities and utilize their greater bargaining capacity in contract creation. Non-African-owned banks are found to exploit non-traditional banking and earn higher non-interest income. In contrast, African banks in other African countries focus more on traditional financial intermediation. Our findings are important to other emerging markets because their banks are traditionally focused on financial intermediation and regulations and supervision in relation to non-traditional activities are relatively less developed. |
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