The interplay of competition, regulation and stability: the case of Sub-Saharan African commercial banks

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Stimulating competition in the bank system without compromising the stability constitutes a major puzzle that bank regulators and practitioners face. Hitherto, empirical studies focusing on Sub-Saharan Africa in addressing these issues for the anticipated regional integration and sustainable growth are rare. This study applied structural equation modelling to simultaneously analyze competition, regulation and stability in a panel of 440 Sub-Saharan African commercial banks over the period from 2006 to 2015. The results provided evidence that competition affects stability via efficiency and that regulation affects stability via competition and efficiency. This study produced critical theoretical and methodological insights with substantial implications for the conduct of bank regulatory policy.

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    • Figure 1. Possible recursive path model for CRS
    • Figure 2. CERS model
    • Table 1. Data measurement model fit
    • Table 2. Recursive model estimates
    • Table 1A. Number of banks per SSA countries
    • Table 2A. Summary statistics
    • Table 3A.Correlation analysis