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Banking Activity Sensitivity to Macroeconomic Shocks and Financial Policies Implications: The Case of CEMAC Sub-region
[Sensibilité de l’activité bancaire aux chocs macroéconomiques et implications de politiques financières : le cas de la sous-région CEMAC]

Author

Listed:
  • Christian Lambert Nguena

    (FSEG - Faculty of Economics and Management - University of Dschang, DYE - Dynamic Young Economists - University of Dschang)

  • Roger Tsafack Nanfosso
Abstract
This paper aims to assess qualitatively and quantitatively the level of resilience of the financial sector in the CEMAC sub-region to macroeconomic shocks and highlight the financial policies that could be implemented. For this purpose, a descriptive analysis of the CEMAC sub-region banking sector, followed by a panel-based econometrics study has been undertaken. The main result from the analysis is that the banking sector of CEMAC is relatively vulnerable to macroeconomic shocks. Accordingly, the decrease of GDP per capita growth rate, long-term financing and real exchange rate as well as the increase of interest rate leads to lower bank provisions. Lower levels of short-term financing induce a lower level of net income commission, while the change in interest rates is an increasing factor. The influence of changes in interest rates on bank's interest margin remains ambiguous. These results confirm the necessity of taking into account the existence of macroeconomic shock constraints in the implementation of financial policies in the sub-region. The paper is original in the manner that it bridges some knowledge gaps of shock management in the monetary zone. It offers policymakers two main insights: the potential rewards for timely intervention to mitigate potential shocks and the need for better control for the credibility and sustainability of the banking system.

Suggested Citation

  • Christian Lambert Nguena & Roger Tsafack Nanfosso, 2014. "Banking Activity Sensitivity to Macroeconomic Shocks and Financial Policies Implications: The Case of CEMAC Sub-region [Sensibilité de l’activité bancaire aux chocs macroéconomiques et implications," Post-Print hal-04229001, HAL.
    • Handle: RePEc:hal:journl:hal-04229001
    DOI: 10.1111/1467-8268.12067
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    Cited by:

    1. Asongu Simplice, 2014. "Fresh Patterns of Liberalization, Bank Return and Return Uncertainty in Africa," Working Papers of the African Governance and Development Institute. 14/004, African Governance and Development Institute..
    2. Asongu, Simplice A., 2017. "Assessing marginal, threshold, and net effects of financial globalisation on financial development in Africa," Journal of Multinational Financial Management, Elsevier, vol. 40(C), pages 103-114.
    3. Christian NGUENA, 2014. "External Debt Origin, Capital Flight and Poverty Reduction in the Franc Zone: Does the Economic Consequences of Sino-African Relationship matter?," Research Africa Network Working Papers 14/016, Research Africa Network (RAN).
    4. Christian Lambert Nguena & Fulbert Tchana Tchana & Albert Zeufack, 2024. "On threshold effect of housing finance on shared prosperity: Evidence from sub‐Saharan Africa," Bulletin of Economic Research, Wiley Blackwell, vol. 76(1), pages 5-40, January.
    5. Christian-Lambert Lambert Nguena & Roger Tsafack-Nanfosso, 2014. "On the Sensitivity of Banking Activity to Macroeconomic Shocks: Evidence from CEMAC Sub-region [Sensibilité du Secteur Bancaire aux Chocs Macroéconomiques: Cas de la sous-région CEMAC]," Post-Print halshs-01097850, HAL.
    6. Baah Aye Kusi & Elikplimi Komla Agbloyor & Vera Ogeh Fiador & Kofi Achampong Osei, 2016. "Does Information Sharing Promote or Detract from Bank Returns: Evidence from Ghana," African Development Review, African Development Bank, vol. 28(3), pages 332-343, September.
    7. Christian Lambert Nguena, 2013. "Inclusive and Pro-Poor Financial System in Africa: Does Islamic Finance Development Matter?," AAYE Policy Research Working Paper Series 13_002, Association of African Young Economists, revised Nov 2013.
    8. Simplice Asongu & Lieven De Moor, 2015. "Financial globalisation and financial development in Africa: assessing marginal, threshold and net effects," Working Papers of the African Governance and Development Institute. 15/040, African Governance and Development Institute..
    9. Nguena Christian Lambert & Tsafack Nanfosso Roger, 2014. "On the Sensitivity of Banking Activity Shocks: Evidence from the CEMAC Sub-region," Economics Bulletin, AccessEcon, vol. 34(1), pages 354-372.

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