Banking regulations on the acceptable standards are one of the most discussed issues for the past few years. The purpose of this study is a quick review of the banking sectors in Algeria, Tunisia, Morocco and Egypt. The methodologies applied to measure the banking efficiency are MFA1, DEA2, α-convergence & β-convergence.
The analysis reveal that poor accounting practices & non availability of credit information due to risk sensitivity has led to a disparity in the private monitoring from internationally acceptable standards. The results of the analysis show improved efficiency levels, since 2005.However lowering the corruption level is a prerequisite for the growth of banking sector.
Political competitiveness, voice and accountability, executive competitiveness, and control of corruption are the four variables that are used to control for market size and power, capital strength and liquidity, the bank market share, a ratio of demand and time deposits in other banks, and inflation. The impact of bank regulations on growth was measured using three financial variables: bank efficiency, private credit and stock turnover. Regulatory variables such as capital requirements stringency, deposit insurance and credit information are also included.
Results of the study indicate that some country variables have no significant effect on the growth, and that the regulatory factors indirectly influence the growth. However, shortcomings of this analysis are, sampling biases, strong indicators and difference in various factors, in specific countries are neglected.
Reference
Arbak.E, Ayadi.R, Casu.B & Naceur.S.B. Convergence of bank regulations on international
norms in the southern Mediterranean: impact on bank performance and growth.
Brussels, Belgium: Centre for European Policy Studies.
