[en] A change in the number of firms is believed to modify the dynamics of market structure and strategies in the market. In a more globalized financial industry, most banking systems are exposed to this type of dynamics, particularly through cross-border banking (CBB). Assuming a market where banks compete à la Stackelberg, this study reveals that a higher number of CBBs may induce the increase of competition when they enter as novel banks. It also suggests that, more efficient banks are more likely to influence market competition. Morever, new banks can influence the improvement of efficiency in the market provided that they show higher level of efficiency than domestic banks. These results are empirically validated. Using a sample of 429 African active commercial banks from 2000 to 2015, this study suggests that CBB activities enhance competition and African CBBs seem to play a more significant role. However, African CBBs exhibit lower efficiency levels as compared to domestic banks and accordingly do not boost bank efficiency. This study also suggests that macroeconomic conditions and institutional variables are important drivers of Bank competition and efficiency. These results are robust to alternative specifications (system-GMM, Quantile regression-Adaptative MCMC, Matching) and proxies of competition.
