Explaining the market power of Ghanaian banks
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Date
2009-02
Authors
Aboagye, Q.Q.A.
Akoena, S.K.
Antwi-Asare, T.O.
Gockel, A.F.
Journal Title
Journal ISSN
Volume Title
Publisher
South African Journal of Economics
Abstract
A competitive banking system helps lower transaction costs and risks. It also helps make financial markets more efficient. In Ghana however, observers believe that the banking industry is not competitive and point to the huge spread between bank lending and borrowing rates as evidence. The Ghanaian banking industry is analysed for evidence of market power by computing the Lerner Index of banks using quarterly data from 2001 to 2006. The evidence is that Ghanaian banks possess market power. Factors that significantly explain the market power of Ghanaian banks are: bank size, efficiency of banks with respect to staff costs, the macroeconomic environment and time. © Journal compilation © 2008 The Economic Society of South Africa.
Description
Keywords
Banks, Ghana, Lerner Index, Market power