Abstract

There has been a monotonic increase in research investigating the performance of commercial banks across the globe. This is a recognition that the banking industry has a significant contribution to the service sector and national output. This paper examined the existence of the structure-conduct performance (SCP) and efficient market hypotheses by employing an autoregressive distributed lag (ARDL) approach for a period between 1990 and 2020. The study revealed the existence of both paradigms due to strongly statistically positive and significant coefficients of bank concentration and the size of the banking sector using the computed composite profitability measure (CPM). The paper suggests various policy implications on internal and external determinants of commercial bank’s performance.

Key words: Malawi, principal component analysis (PCA), total bank deposit, bank concentration ratio, STATA.