Abstract:
The banking system is the engine of economic growth and an imperative part of the country’s
economic development and its performance is a key indicator of a country’s financial health, as a
result, banks and other financial institutions have emerged as one of the most important financial
resources for businesses (Nimalathasan, 2008). The Bank is a particular institution of business in
which shareholders invest in their shares/money to maximize profits or increase the earnings per
share. Banking sector begins with the first prototype banks of merchants of the ancient world,
which made grain loans to farmers and traders who carried goods between cities (Goldthwaite,
1995). At the beginning of the 21st century, the biggest banks in the industrial world have become
complex financial organizations that offer a wide variety of services to international markets and
control billions of dollars in cash and assets (IISD Report, 2013).
Globally, the performance of local commercial banks serves as a critical barometer of a nation's
economic vitality and financial health. According to recent data from the World Bank, the banking
sector plays a central role in most economies, with the size of the global banking system estimated
at around $124 trillion in total assets (World Bank, 2022). The sector is not only a repository of
savings and a source of credit but also a key driver of economic development, providing essential
financial intermediation services. However, banks worldwide have had to navigate the complex
terrain of regulatory reforms following the 2008 financial crisis, adapting to evolving customer
expectations in an increasingly digital world, and ensuring the sustainability of their business
models amid a changing financial landscape (World Bank, 2022).
Sub-Saharan Africa represents a region of diverse economies and banking landscapes, where the
performance of local commercial banks is central to the economic progress of the continent. As
per data from the African Development Bank, the banking sector in Sub-Saharan Africa has
witnessed substantial growth over the past decade, with total banking assets reaching
approximately $1.5 trillion, reflecting its pivotal role in financial intermediation and economic
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development (African Development Bank, 2022). However, the region also grapples with
multifaceted challenges, including limited access to banking services, regulatory constraints, and
the need for innovations to address the unique demands of its population (Ekanu, 2019). In this
context, an in-depth exploration of the performance of local commercial banks in Sub-Saharan
Africa becomes increasingly significant, as it not only holds implications for individual nations
but also contributes to the broader economic development and financial stability of the continent.
