Economics of African Banking System

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Banks play an important role in the developing economies as they intermediate between the savings and the demand for investment and consumption funds that finance the development of business and trade. To efficiently and effectively perform this function and help optimize the allocation of scarce investment funds, evaluation of banking sector efficiency is necessary. Not much has been documented on the efficiency of banks in Africa due to a combination of several reasons such as in availability of reliable data, corporate non-transparency, and political and economic uncertainty.