Understanding the Drivers of Bank Lending of the Banking Sector in the Central African Economic and Monetary Community (CEMAC) Zone

Nnane Eric Sumelong., Nwahanye Emmanuel (PhD). and Visemih William Muffee
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Nnane Eric Sumelong.: PhD Research Fellow, Department of Banking and Finance, Faculty of Social and Management Sciences, Univeristy of Buea-Cameroon
Nwahanye Emmanuel (PhD).: Associate Professor of Management, Department of Economics and Management, Faculty of Social and Management Sciences, Univeristy of Buea-Cameroon
Visemih William Muffee: Professor of Accounting, Faculty of Social and Management Sciences, Univeristy of Buea-Cameroon

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 7, 2044-2057

Abstract: The study has observed that despite the reforms adopted in the Central African Economic and Monetary Community (CEMAC) countries to prevent a situation similar to the subprime crisis experienced in the 1970s, the banking sector in the CEMAC zone has remained unprofitable. With increase in globalisation across the globe, the study therefore examines the drivers of financial globalisation on bank lending of the banking sector in the CEMAC zone. Using panel data obtained from IMF Financial Development database and the World Development Indicators, the study carried out the investigation with the aid of the Feasible Generalized Least Squares (FGLS) and Panel Quantile on Quantile regressions. The finding reveals that financial globalization and bank concentration have strong negative relationships with bank lending, while the impact of regulatory capital is inconclusive. GDP and gross fixed capital formation also exhibit negative associations with lending. Base on the findings, the study suggests that policymakers should carefully assess the effects of financial globalisation and bank concentration, promote competition and diversification in the banking sector, and prioritize policies that support macroeconomic stability and growth.

Date: 2024
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