Funding architecture and bank efficiency in Africa: evidence from 35 countries

Purpose This study examines the efficiency profiles of African banks using three alternative financial intermediation models that explicitly capture distinct funding structures. Unlike prior studies that treat bank intermediation as a homogeneous production process, this study evaluates how distinct liability-side funding structures shape banks' ability to transform inputs into loan outputs across the African continent. Design/methodology/approach Using quarterly data for 295 commercial banks across 35 African countries from 2018Q2 to 2025Q2, the analysis applies a slack-based measure data envelopment analysis under variable returns to scale and an output orientation. Three alternative conceptual intermediation models – the global intermediation model, the retail-focused intermediation model, and the wholesale and interbank funding efficiency model – are proposed to capture distinct funding architectures in African banking systems. Findings The results show that African banks operate at moderate but highly heterogeneous efficiency profiles across countries, time periods, regions, and funding structures. Efficiency is consistently highest when banks rely on diversified aggregate funding sources, lower when intermediation depends primarily on retail deposits, and lowest when funding is concentrated in wholesale and interbank markets. Large and listed banks outperform smaller and unlisted institutions. Regionally, North and Southern African banking systems exhibit stronger efficiency profiles than other subregions. These results remain robust across alternative DEA specifications and input–output specifications. Originality/value This study contributes to the African banking efficiency literature by incorporating funding architecture as a structural dimension of bank efficiency. It proposes three conceptual alternative funding-based intermediation models that capture distinct liability-side funding environments and apply them to continent-wide quarterly bank-level data. By extending the conventional single-model intermediation approach, the study provides evidence consistent with the view that differences in funding environments systematically shape efficiency outcomes across African banking systems.