Journal of Research in International Business and Management

The effect of income classification on bank efficiency in Africa

Abstract

Roseline Oluitan

The role of financial institutions in enhancing growth is settled in the literature. However, banks in Africa are classified as under-developed. This paper examines the situation of these institutions whether they are discharging their duties efficiently. Also considered is the effect of income classification of the countries whether it has any impact on the level of efficiency of the financial institutions. SFA method is applied along with a multi input and output approach. In all, about nine different estimations were conducted. The result suggests about 18 – 26% of inefficiency and that income level is one of the determinants of efficiency within countries in Africa. The study covers ten years for 47 African countries.

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