Abstract
This study investigates the level of competition among commercial banks in Kenya over the period 2001 to 2014. The study used a balanced panel data set from 36 commercial banks, the performance dynamics approach and the generalized method of moments to estimate the resulting dynamic panel models. The investigation established that the level of competition among commercial banks in Kenya is low and characterized by 93.9 per percent persistence in profitability. Arising from the study findings, it is important that the government intervenes to rectify the intermediation inefficiency occasioned by ineffectiveness of competition. It is also important that small sized banks in the sector voluntarily merge with other smaller banks in order to exert substantial competition to the large and medium sized banks.
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Notes
There is now a growing liberation challenge that “Sub Saharan Africa” is no synonym to “Africa South of Sahara”, the former being considered socially demeaning and the latter geographically placing. See information to authors in http://www.jpanafrican.org/submission.htm
Being industry wide measures the λi are assumed to be common for all the commercial banks
This was necessitated by the fact that summary statistics of pooled series understate the standard deviation of firm invariant but time variant variables
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Mdoe, I.J., Omolo, J.O. & Wawire, N.H. Bank Competition in Kenya. J Ind Compet Trade 19, 83–102 (2019). https://doi.org/10.1007/s10842-018-0279-2
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DOI: https://doi.org/10.1007/s10842-018-0279-2