Does banking consolidation improve bank stability? Evidence from Sub-Saharan Africa

IF 2 Q2 BUSINESS, FINANCE

Journal of Financial Regulation and Compliance Pub Date : 2024-07-30 DOI:10.1108/jfrc-03-2024-0039

Philip Ayagre, Emmanuel Sarpong-Kumankoma, Anthony Q.Q. Aboagye, Patrick Opoku Asuming

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引用次数: 0

Abstract

Purpose

This study aims to investigate the influence of banking consolidations on bank stability in Sub-Saharan African (SSA) countries for the period 2003–2019, following a series of bank mergers and acquisitions (M&As) in the region and whether regulation-induced bank M&As affect banking sector stability.

Design/methodology/approach

The fixed effect panel regression model is used to understand the influence of regulation-induced and voluntary bank mergers and acquisitions on banking stability in SSA. The study also controlled for bank-specific factors, market concentration and macroeconomic variables that affect banking stability. The study used three measures of bank stability: the Z-score, risk-adjusted return on assets and risk-adjusted bank capital.

Findings

The study results reveal that voluntary bank M&As, market concentration, net interest margin, bank capital, bank deposits and income diversification influence banking sector stability positively. However, the findings show that regulation-induced bank mergers and acquisitions impact banking stability negatively. Where bank M&As were a result of banking regulatory reforms, called regulation-induced mergers and acquisitions (RIM&As), banking stability suffered, but voluntary bank M&As improved banking stability. Again, the study supports the concentration–stability argument w?>rather than the competition–stability hypothesis. Therefore, more concentrated banking markets in SSA countries have more stable banks and fewer risks of system-wide bank failures. Other factors influencing banking stability in SSA are return on equity, bank efficiency (cost-to-income), bank size and deposits-to-assets ratio. However, their relationship is negative with the stability of the banking sector.

Practical implications

The findings imply that the regulatory authorities should encourage voluntary bank M&As and not regulation-induced bank M&As to improve the stability of the banking systems in SSA.

Originality/value

The study provides new evidence on the effects of regulation-induced bank M&As on the stability of banks.

查看原文本刊更多论文

银行业整合是否能提高银行稳定性？撒哈拉以南非洲的证据

本研究旨在调查 2003-2019 年期间撒哈拉以南非洲（SSA）国家在发生一系列银行并购（M&As）后，银行合并对银行稳定性的影响，以及监管引发的银行并购是否会影响银行业的稳定性。研究还控制了影响银行稳定性的银行特定因素、市场集中度和宏观经济变量。研究结果表明，自愿银行并购、市场集中度、净息差、银行资本、银行存款和收入多样化对银行业的稳定性有积极影响。然而，研究结果表明，监管引发的银行并购对银行业的稳定性有负面影响。如果银行并购是银行监管改革的结果，即监管诱导型并购（RIM&As），则银行稳定性会受到影响，但自愿性银行并购则会提高银行稳定性。这项研究再次支持集中-稳定论，而不是竞争-稳定假说。因此，撒哈拉以南非洲国家银行市场集中度越高，银行越稳定，全系统银行倒闭的风险越小。影响撒哈拉以南非洲银行业稳定性的其他因素包括股本回报率、银行效率（成本收入比）、银行规模和存款资产比。研究结果表明，监管当局应鼓励自愿的银行并购，而不是监管引发的银行并购，以提高撒哈拉以南非洲国家银行系统的稳定性。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Journal of Financial Regulation and Compliance BUSINESS, FINANCE-

CiteScore

2.60

自引率

11.10%

发文量

期刊介绍： Since its inception in 1992, the Journal of Financial Regulation and Compliance has provided an authoritative and scholarly platform for international research in financial regulation and compliance. The journal is at the intersection between academic research and the practice of financial regulation, with distinguished past authors including senior regulators, central bankers and even a Prime Minister. Financial crises, predatory practices, internationalization and integration, the increased use of technology and financial innovation are just some of the changes and issues that contemporary financial regulators are grappling with. These challenges and changes hold profound implications for regulation and compliance, ranging from macro-prudential to consumer protection policies. The journal seeks to illuminate these issues, is pluralistic in approach and invites scholarly papers using any appropriate methodology. Accordingly, the journal welcomes submissions from finance, law, economics and interdisciplinary perspectives. A broad spectrum of research styles, sources of information and topics (e.g. banking laws and regulations, stock market and cross border regulation, risk assessment and management, training and competence, competition law, case law, compliance and regulatory updates and guidelines) are appropriate. All submissions are double-blind refereed and judged on academic rigour, originality, quality of exposition and relevance to policy and practice. Once accepted, individual articles are typeset, proofed and published online as the Version of Record within an average of 32 days, so that articles can be downloaded and cited earlier.