Cost-efficiency and bank profitability during health crisis

ABSTRACT

This paper examines the impact of cost-efficiency on bank profitability in the context of the Covid-19 pandemic using quarterly data from a panel of banks operating in five (5) Sub-Saharan African countries. The findings show that cost-efficient banks are more profitable amid the pandemic. Additionally, we found that revenue diversification is associated with strong financial performance. Our findings contribute to literature by proposing the adoption of aggressive cost control and revenue diversification strategies by the management of banks to ensure sustainable and resilient financial performance in times of crises when interest incomes are sticky.

KEYWORDS:

• Cost-efficiency
• profitability
• Covid-19
• revenue diversification
• credit risk

JEL CLASSIFICATION:

• G21
• O16

Disclosure statement

No potential conflict of interest was reported by the author(s).

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.