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Bank productivity in Africa

Sarah Beatson Nartey (Business School, University of Ghana, Accra, Ghana)
Kofi A. Osei (Business School, University of Ghana, Accra, Ghana)
Emmanuel Sarpong-Kumankoma (Business School, University of Ghana, Accra, Ghana)

International Journal of Productivity and Performance Management

ISSN: 1741-0401

Article publication date: 23 May 2019

445

Abstract

Purpose

The purpose of this paper is to provide a total factor productivity index for the African banking industry. It also investigates the impact of some internal and external determinants affecting bank productivity.

Design/methodology/approach

The biennial Malmquist productivity index and various regression models (ordinary least squares, Tobit and truncated bootstrapped regression) are employed in analyzing data from 120 banks in 24 African countries from 2007 to 2012.

Findings

The results indicate a general decline in productivity of banks in Africa, largely due to inadequate technological progress. State banks are found to be more productive than foreign and private banks. The regression analyses showed that non-executive directors, leverage, management quality, credit risk, competition and exchange rate have significant impact on bank productivity, but ownership and CEO-duality do not.

Practical implications

The results have implications for management of banks, governments and regulators. It shows the need for policy and investments that improve state-of-the art technology. The findings also seem to suggest poor management practices in input usage, especially in operational management, as well as costs emanating from non-interest sources. Bank managers need to address these deficiencies to improve productivity in African banking markets.

Originality/value

A major contribution of this paper is the productivity index provided for the African banking industry. This study is also the first to apply the biennial Malmquist to analyze productivity in the African banking industry.

Keywords

Citation

Nartey, S.B., Osei, K.A. and Sarpong-Kumankoma, E. (2019), "Bank productivity in Africa", International Journal of Productivity and Performance Management, Vol. 69 No. 9, pp. 1973-1997. https://doi.org/10.1108/IJPPM-09-2018-0328

Publisher

:

Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited

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