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Africa Economic Brief - The Banking System in Africa: Main Facts and Challenges

19-Oct-2015

Abstract

This brief presents a comparative review of the banking systems and regulations in Africa relative to other regions of the world. It compares indicators of the banking environment (including efficiency, depth, penetration, innovation, and competition), as well as regulation and supervision standards. The review suggests that while Africa’s banking environment is relatively shallow and less penetrated, it is as competitive as those in other developing and high income regions. The region has made improvements in banking technology and innovation, and in some cases, has leap-frogged ahead of other regions particularly in mobile banking. In terms of regulations, banks in Africa are well regulated with competition and entry regulations on par with standards in other major regions. In spite of this, there has been tremendous progress in curbing systemic bank crises in the region. Since the mid1990s, the region has registered a single systemic bank crisis (43 prior to that) relative to 47 for the rest of the world. This is attributed to a relatively safe banking environment that has emerged from stronger financial regulations and improved overall governance.

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