Bank efficiency and openness in Africa: do income levels matter?

Abstract

The business of this study is to investigate what role openness play in bank efficiency with respect to income levels. From a panel of 29 countries spelling from 1987 to 2008, we provide evidence that; trade and financial openness, breed less bank efficiency in low income countries; justifying the absence of a banking comparative advantage in said countries and therefore a likely palaver of over-liquidity. Results for middle income countries are not significant. For policy implication, it holds that; openness will increase the economic cost of banks in low income sampled countries. Bearing this in mind, trade openness will be more detrimental than financial openness