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Analysis of the quiet life hypothesis implications in the WAEMU banking sector
African Development Review ( IF 2.766 ) Pub Date : 2021-07-30 , DOI: 10.1111/1467-8268.12586
Jude Eggoh 1 , Hodonou Dannon 2 , Abdoulaye Ndiaye 3
Affiliation  

This paper investigates the relationship between market power and cost efficiency for a sample of 63 banks in the West African Economic and Monetary Union (WAEMU) from seven countries over the period of 2004–2016. Our empirical methodology relies on a panel data analysis. Our results show that an increase in market power reduces banking efficiency in the WAEMU countries, and therefore suggest that competition in the banking sector improves cost efficiency. These findings are consistent with the quiet life hypothesis. However, our nonlinear investigation indicates that beyond a specific threshold of competition, this latter deteriorates the cost efficiency of banks, thus confirming the efficient structure hypothesis. These results indicate the efficiency improvement of the banking system in the WAEMU countries by the control of operating costs. Moreover, the central bank and the banking regulators must increase their supervision over the most competitive banks of the WAEMU.

中文翻译:

分析WAEMU银行业的平静生活假说的含义

本文以 2004 年至 2016 年期间来自七个国家的西非经济和货币联盟 (WAEMU) 的 63 家银行为样本,研究了市场支配力与成本效率之间的关系。我们的实证方法依赖于面板数据分析。我们的结果表明,市场支配力的增加会降低 WAEMU 国家的银行业效率,因此表明银行业的竞争会提高成本效率。这些发现与安静生活假说是一致的。然而,我们的非线性调查表明,超过特定的竞争门槛,后者会降低银行的成本效率,从而证实了有效结构假设。这些结果表明通过控制运营成本提高了 WAEMU 国家银行系统的效率。
更新日期:2021-09-17
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