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The Effects of Minimum Bank Capital and Governance on the Financing of the EMCCA Economies

In: Monetary and Financial Systems in Africa

Author

Listed:
  • Issidor Noumba

    (University of Yaounde II)

  • André Arnaud Enguene

    (University of Yaounde II)

Abstract

The chapter analyzes the effect of minimum bank capital on the financing of the CEMAC economies over 1998–2016, using data from BEAC and COBAC. Commercial banks operating in that zone are reluctant to finance local small and medium enterprises (SMEs). In December 2019, SMEs received 14.6% of total loans, while big companies obtained 78%. So, their analysis is on the effect of the minimum bank capital on the real cost of credit, the credit term structure, and the various economic agents. Their findings, among other things, show that: (i) the minimum bank capital is positively and significantly linked to the total credits to the economy; (ii) the minimum bank capital is negatively associated with the short-run loans. The study suggests that regulatory authorities find ways of encouraging banks to increase the level of business financing sharply.

Suggested Citation

  • Issidor Noumba & André Arnaud Enguene, 2022. "The Effects of Minimum Bank Capital and Governance on the Financing of the EMCCA Economies," Springer Books, in: Aloysius Ajab Amin & Regina Nsang Tawah & Augustin Ntembe (ed.), Monetary and Financial Systems in Africa, chapter 0, pages 143-168, Springer.
    • Handle: RePEc:spr:sprchp:978-3-030-96225-8_7
    DOI: 10.1007/978-3-030-96225-8_7
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