Institutional dynamics and regulatory reform in Sub-Saharan African banking: evidence from ownership, governance, and Basel III implementation

Abstract

Across three empirical studies, this thesis examines the institutional dynamics and regulatory reform in Sub-Saharan African (SSA) banking, focusing on ownership, governance and Basel III implementation. As corporate governance reforms and global prudential standards continue to reshape banking systems, understanding how such reforms operate within emerging market institutional contexts is increasingly important. The thesis therefore investigates how ownership structures, governance mechanisms, and regulatory reforms interact within SSA banking systems, characterised by persistent institutional weaknesses, regulatory heterogeneity and evolving financial markets. The first empirical study examines how different ownership structures—government, foreign, managerial, individual, and institutional ownership—affect bank performance and how these effects are conditioned by the broader business environment. The findings reveal mixed and sometimes counterintuitive patterns: institutional, foreign, and managerial ownership often reduce or fail to enhance profitability, suggesting that their expected governance benefits are constrained by weak legal and regulatory institutions. These demonstrate that ownership reforms cannot be assessed independently of the institutional and business environments in which banks operate. The second empirical study examines the effects of corporate governance practices, market discipline, and central bank supervision on the performance of listed and privately owned banks in SSA. Governance mechanisms have heterogeneous effects across the two groups. Board size, non-executive directors, female directors, and board committee structures exhibit stronger and more consistent associations with performance among listed banks, whereas private banks frequently demonstrate performance advantages associated with leaner organisational structures and greater operational adaptability. Domestic stock markets enhance transparency and discipline whiles Central bank independence improves private bank performance but reduces listed bank performance, and its interaction with governance committees can be counterintuitive when supervisory and internal oversight mechanisms are misaligned. The third empirical study investigates the effects of Basel III and related prudential regulatory reforms on banking efficiency and stability in SSA. The reforms initially reduce stability, profitability, and liquidity, consistent with short-term adjustment costs arising from stricter capital and liquidity requirements. Over time, improvements emerge in financial depth and efficiency, though gains in access remain uneven. Collectively, the three studies show that governance quality and regulatory outcomes in SSA depend fundamentally on institutional quality and business-environment conditions. The thesis contributes new evidence from an under-researched region and applies advanced panel-data and causal-inference methods to assess Basel III’s effects, demonstrating that governance and regulatory reforms must be contextualised within emerging-market institutional realities.