Market structure and profit performance of Banks in Sierra Leone

Abstract

The study examines the effects of market structure on profitability in the Sierra Leone banking industry. There are two competing hypotheses—the traditional structure–conduct–performance (SCP) hypothesis and the efficiency hypothesis (EH). Using pooled and quarterly data for the period 2006-2011, this study tests the validity of these two hypotheses. In general, the overall results of the study have been mixed. However, capital to asset ratio and expenses to asset ratio are found to influence their performance. But for definitive policy purposes, the impact of the banking structure needs to be explored further.