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Seminar - How has the rise of pan-African banks impacted on bank stability in WAEMU?

Speaker: Dr Désiré Kanga, SOAS University of London
Time: Wednesday, 16 October 2019, 13:00-15:00
Venue: S314 (Paul Webley Wing, Senate House)

Abstract
We investigate the impact of the recent rise of pan-African banks, which are indigenous African banks with cross-border networks, on banking sector stability within the West African Economic and Monetary Union (WAEMU). Specifically, we test the competition-stability hypothesis using hand-collected bank level data from all WAEMU countries for 2000-2017. We uncover evidence to suggest that the increase in competition engendered by the entry of pan-African banks is associated with an increase in banking stability as well as an increase in banking fragility – it all depends on the origins of banks in WAEMU. Specifically, our results suggest that the expansion of pan-African banks into the WAEMU banking system supports competition-fragility hypothesis, while the presence of French banks in WAEMU supports both the competition-stability and the competition-fragility views. Overall, what is clear is that bank profit is the main mechanism through which competition is associated with an increase in banking fragility in the WAEMU. 

Keywords: Bank competition; Banking fragility; Banking stability; Pan-African banks; WAEMU. 

JEL Codes: G21; G28. 

Co-authors: Victor Murinde (SOAS University of London), Issouf Soumaré (Laval University)

The seminars are sponsored by grants from DFID and ESRC [ESRC Ref: ES/N013344/2], ESRC and NSFC [ESRC Ref: ES/P005241/1] and AXA Research Fund