ANALYSIS OF BANK EFFICIENCY IN PRICING IN WAEMU CONTRIES

Abstract

This paper analyses the effect of market power on the efficiency of banks in the WAEMU region. The aim is to identify the pricing scheme of the banking industries and to analyse the effect of the Lerner index on bank cost efficiency. The analysis covers the period from 2010 to 2015 and uses secondary data from balance sheets and income statements as well as the Central Bank of West African States (BCEAO) directories. The GMM method was used to analyse the relationship between market power as measured by the Lerner index and the cost efficiency of banks. The results of this study showed that banks in the WAEMU do not practice marginal cost pricing, and therefore market power has a positive and significant effect on the efficiency of banks in the WAEMU.