This paper empirically examines the effects of market structure on the performance of the banking industry in Botswana by analysing business performance indicators of a panel of six commercial banks for the period 2011 to 2016. The study employs the data envelopment analysis (DEA) technique and the system-generalised method of moments (S-GMM) to determine the effects of concentration, market share and efficiency on performance. The estimation results show moderate profit persistence, suggesting that departures from competitive performance might not be large. Therefore, the results suggest that bank profitability comes from superior managerial efficiency of the banks and not from scale effects and abuse of market power to influence prices or collusive behaviour of dominant banks. This paper concludes that the improvement in banking sector profitability does not raise any competition concerns as they are driven by adoption and use of organisational strategies and technologies that improve the efficiency rather than market power or its abuse.

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