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EXPLAINING THE MARKET POWER OF GHANAIAN BANKS 1
Author(s) -
Aboagye Q.q. Anthony,
Akoena S.k.,
Antwiasare T.o.,
Gockel A.f.
Publication year - 2008
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/j.1813-6982.2008.00221.x
Subject(s) - market power , banking industry , business , lerner index , point (geometry) , database transaction , financial system , index (typography) , power (physics) , financial market , transaction cost , economics , monetary economics , finance , commerce , market economy , physics , geometry , mathematics , quantum mechanics , world wide web , computer science , programming language , monopoly
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.