Differences in Bank Profit Persistence in Sub-Saharan Africa

The purpose of this paper is to examine differences in determinants of bank profit persistence among Sub-Saharan African (SSA) countries. Using system generalized method of moments and data from four SSA countries during the period 2006-2012, this study considers differences in determinants of bank profit persistence across countries. Efficiency in cost management is a major determinant of profit persistence in all the countries. However, concentration is found to be insignificant in all the estimations, suggesting that efficiency may be a more important determinant of profit persistence than concentration. Economic freedom associates negatively with profit persistence in Ghana, but its effect is insignificant in Tanzania, Kenya and South Africa. Lending specialization translates into less profit persistence in South Africa, but greater persistence in Tanzania. Higher levels of financial development result in lower profit persistence in Kenya and Ghana, but does not matter in Tanzania and South Africa.