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Efficiency of financial micro intermediation in the WAEMU countries: A stochastic frontier production analysis

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  • BABATOUNDE, Latoundji Alain

Abstract

This paper investigates the efficacy and technical efficiency of financial micro intermediation in the productive process of the WAEMU economies over the period 2002-2007 using a stochastic frontier production model with technical inefficiency effects. Four specific variables of the financial dualism deepening and the financial micro intermediation are considered: the ratio of microcredit to GDP, the microcredit growth rate, the share of microcredit in the economy financing due to the private sector and the agents preference for decentralized deposits. Our findings show that the four variables have positive effect on technical efficiency with 0.6 of semi-elasticity estimated on average whereas bank loans have on average only 0.3 on average. We conclude that the financial micro intermediation development which results from the financial dualism deepening makes it possible to almost double increase the productive efficiency in WAEMU area.

Suggested Citation

  • BABATOUNDE, Latoundji Alain, 2010. "Efficiency of financial micro intermediation in the WAEMU countries: A stochastic frontier production analysis," MPRA Paper 33446, University Library of Munich, Germany, revised Aug 2011.
    • Handle: RePEc:pra:mprapa:33446
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    More about this item

    Keywords

    Financial micro intermediation; financial dualism; stochastic frontier; technical efficiency; WAEMU;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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