Pursuing efficiency while maintaining outreach: Bank privatization in Tanzania

Cull, Robert; Spreng, Connor P.

doi:10.1016/j.jdeveco.2010.01.010

Cited by 30 publications

(16 citation statements)

References 22 publications

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“…Relative to the mean concentration ratio for sub‐Saharan Africa (SSA), Tanzania's banking sector is less concentrated. In 2006, the three‐bank mean concentration ratio measured in terms of assets for SSA was estimated at 89.1 per cent (Cull and Spreng, 2008).…”

Section: Financial Reformsmentioning

confidence: 99%

“…The completion of privatization of state banks was expected to infuse improved credit availability and enhance competitiveness in the Tanzanian banking industry. In this regard, Cull and Spreng (2008) provide a case analysis of the privatization programme and find that although profitability of the new privatized bank had improved, lending to the private sector remained low.…”

Section: Introductionmentioning

confidence: 99%

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Competitive Conditions in the Tanzanian Commercial Banking Industry

Simpasa¹

2011

African Development Review

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Since 1991, Tanzania has made important improvements in reforming its financial sector, dismantling the state-dominated banking sector and allowing foreign bank entry. Despite this, the banking industry is still concentrated with low accessibility to financial services. Large foreign banks dominate the financial landscape, preventing competitive dynamism to permeate the sector. This paper analyses the competitive nature of the Tanzanian banking industry from 2004 to 2008. Utilizing a rich bank level data set, we employ the Panzar-Rosse methodology to compute the competitive index, taking into account risk, efficiency, regulatory and macroeconomic factors. The results show that banks in Tanzania earned their income under conditions of oligopolistic conduct. Moreover, the competitive index derived from an interest revenue equation was not significantly different from that obtained using an aggregate revenue measure. This suggests that the degree of contestability from traditional intermediation activities approximates overall bank behaviour. The overall message is that greater market contestability can be achieved by adopting measures aimed at stimulating competitiveness in the banking sector, including consolidating gains on the macroeconomic front and allowing more foreign bank entry so as to increase the spread of banking services.

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Section: Financial Reformsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Competitive Conditions in the Tanzanian Commercial Banking Industry

Simpasa¹

2011

African Development Review

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“…The new National Bank of Commerce's profitability and portfolio quality improved although credit growth was initially slow. Although finding a buyer for the National Microfinance Bank proved difficult, profitability eventually improved and lending grew, while the share of non-performing loans remained low (Cull and Spreng, 2011). Ultimately, Rabobank took management control of NMB.…”

mentioning

confidence: 99%

Cross-Border Banking and Financial Deepening: The African Experience

Beck¹

2014

Journal of African Economies

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“…Kablan (2007) concludes that state-owned banks are the least efficient ones in six WAEMU countries. Profitability and portfolio quality increased after the privatization of Tanzania's National Bank of Commerce (Cull and Spreng, 2011) while ROE increased and NPLs decreased in Nigeria, indicating performance improvements thanks to the privatization program launched in the early 1990s (Beck, Cull and Jerome, 2005). The privatization of Uganda Commercial Bank (UCB) to the South Pan-African bank Stanbic led to profitability improvement while no outreach deterioration was observed (Clarke, Cull and Fuchs, 2009).…”

Section: Bank Ownership and Efficiencymentioning

confidence: 99%

Do Pan-African banks have the best of both worlds?

Zins

Weill

2018

Economic Systems

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There has been a large expansion of foreign banks in Africa over the two decades with Pan-African banks playing a key role in this phenomenon. This paper questions if this development is beneficial for bank efficiency in African countries by investigating if Pan-African banks are more efficient than other types of foreign banks and domestic banks. We analyze the relation between ownership type and bank efficiency on a large sample of African banks covering 39 African countries over the period 2002-2015. We find that Pan-African banks are the most efficient banks in African banking industries. We explain this finding by the fact that these banks combine the best of both worlds: they have the global advantages of foreign banks and the home field advantages of domestic banks. They are then able to be more efficient than foreign banks from developed countries but also than domestic banks. This suggests that favoring entry of Pan-African banks would be beneficial to bank efficiency in Africa.JEL Codes: G21, G32, N27.

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Pursuing efficiency while maintaining outreach: Bank privatization in Tanzania

Cited by 30 publications

References 22 publications

Competitive Conditions in the Tanzanian Commercial Banking Industry

Competitive Conditions in the Tanzanian Commercial Banking Industry

Cross-Border Banking and Financial Deepening: The African Experience

Do Pan-African banks have the best of both worlds?

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