Central bank coordinated policies and bank market power: an insight from the African context
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Date
2023
Journal Title
Journal ISSN
Volume Title
Publisher
Cogent Economics & Finance
Abstract
The paper examines the impact of central bank regulatory policies on
market power in Africa. The study presents a representative sample of 52 African
economies over the period 2006–2020. The study shows that the individual regulatory policies of the central bank (i.e. monetary and macro-prudential policies)
enhance banks’ market power. Also, it reveals that central bank's regulatory policies
are better coordinated, as complements, in achieving greater market power.
banks in countries with strong central bank independence (CBI) framework.
However, the coordinated policies are substitutes in determining bank’s market
power in countries with weak CBI framework. The policy implication is that the right
policy mix of coordinated central bank regulatory policy framework is important in
determining an optimal outcome of bank’s market power in both an inclusive
central bank (monetary-prudential) policy targeting economies and an independent
policy targeting economies.
Description
Research Article
Keywords
Central bank independence and market power, Monetary and Macro-prudential policies, African context