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Bank Capital and Credit Supply in Ivory Coast: Evidence from an ARDLBounds Testing Approach

Author

Listed:
  • PRAO YAO Seraphin

    (Professor-Researcher at Alassane Ouattara University (Bouaké), Member of Laboratory of Analysis and Modeling of Economic Policies, B P V 18 01, Bouaké, Ivory Coast)

  • Kamalan Eugène

    (Professor-Researcher at Alassane Ouattara University (Bouaké) / LAMP-Laboratory of Analysis and Modeling of Economic Policies, Bouaké, Ivory Coast)

Abstract
The aim of this paper is to examine the impact of bank minimum capital requirement on credit supply in Ivory Coast, over the period from 1982 to 2016. To this end, the ARDL method was used to study the nature of the relationship between our explanatory variables and bank credit supply in Ivory Coast. The study indicates some major results. The results showed that in the short term, real GDP per capita and bank size influence credit supply in Ivory Coast. Real GDP per capita acts negatively on credit supply in the short run while bank size has a positive influence on banks’ capacity to finance the economy. In the long run, the Cooke ratio and the openness rate have an impact on bank credit supply in Ivory Coast. The recovery of bank minimum capital requirements positively influences bank credit supply while the openness of the economy negatively impacts banks’ ability to offer bank credit. In terms of economic policies implications, monetary authorities must enforce and respect the policy of increasing bank minimum capital requirements. They must encourage banks to increase their banking assets.

Suggested Citation

  • PRAO YAO Seraphin & Kamalan Eugène, 2018. "Bank Capital and Credit Supply in Ivory Coast: Evidence from an ARDLBounds Testing Approach," International Journal of Economics and Financial Research, Academic Research Publishing Group, vol. 4(5), pages 99-106, 05-2018.
    • Handle: RePEc:arp:ijefrr:2018:p:99-106
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    More about this item

    Keywords

    Capital; Credit supply; Impact; Cooke ratio; Bank capital; Bank.;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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