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Deregulation, efficiency and competition in developing banking markets: do reforms really work? A case study for Ghana
journal contribution
posted on 2019-01-10, 14:25 authored by John K. Dadzie, Alessandra FerrariAlessandra FerrariA key research question that remains largely unanswered especially in the African context is whether the macroeconomic environment and the level of financial development of a country determine the effectiveness of financial reforms. This has important policy implications. We choose Ghana as a case study and carry out an in-depth analysis of its comprehensive set of financial reforms, implemented in the 2000s, which we look at individually. We estimate a stochastic cost frontier to look at efficiency. This is then followed by two different models of competition on the loans market, the main target of the reforms. We find that only the removal of entry restrictions is significant at improving banks efficiency and that private and global foreign, but not regional banks, benefit from it. The results show however no improvements in competition, and reveal instead that macroeconomic and institutional weaknesses continue to exert a negative counterbalancing effect. Reforms need to be anchored on stronger macroeconomic fundamentals, institutional initiatives and generally stronger credit environments for their full potential to be revealed in the context of developing financial markets.
Funding
We would like to thank the Commonwealth Scholarship Commission for the funding provided under their CSFP scheme to support the completion of this project.
History
School
- Business and Economics
Department
- Economics
Published in
Journal of Banking RegulationCitation
DADZIE, J.K. and FERRARI, A., 2019. Deregulation, efficiency and competition in developing banking markets: do reforms really work? A case study for Ghana. Journal of Banking Regulation, In Press.Publisher
Palgrave Macmillan (part of Springer Nature)Version
- AM (Accepted Manuscript)
Publisher statement
This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/Acceptance date
2018-12-21Publication date
2019Notes
This paper is in closed access until 12 months after publication.ISSN
1745-6452Publisher version
Language
- en