Which Dimension of Institutional Quality Matters for Bank Performance in West Africa?

Abstract

While considering many bank-specific and macroeconomic factors that have been identified both in theory and empirics as determinants of bank performance. The study further accounts for the role of institutional environment to strengthening our understanding of the probable factors responsible for banking system in West Africa. Utilizing two step system GMM panel technique, the study empirically shows that the impact of institutional environment either in its whole composite forms or when disaggregated into economic, political, and institutional components are sensitive to the measure of bank performance under consideration. Banking system in West Africa precisely tends to respond more favourable to institutional factors when bank performance is evaluated via net interest margin (NIM).

Keywords: Bank Performance; Institutional Environment, Bank Specific-Factors, System-GMM; West Africa


Article Review Status: Published

Pages: 22-36 (Download PDF)

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