Unravelling the Synergistic Effect of Institutional Resilience on Asset Quality; A Contemporary Outlook of Cameroon’s Credit Unions

Ngoh Christopher Sam (), Njekang Dieudonne Nkwati () and Humphred Watard ()

International Journal of Finance, 2025, vol. 10, issue 7, 30 - 49

Abstract: Purpose: Asset quality is a vital indicator of the stability and sustainability of credit unions worldwide, yet many institutions, especially in developing countries like Cameroon, continue to face significant challenges in maintaining low non-performing loan ratios. This study aims to examine how institutional resilience; specifically regulatory compliance, liquidity management and membership size affect asset quality within Cameroon’s credit union sector. The specific objectives include assessing the effect of COBAC norms on asset quality, evaluating the effect of liquidity management on asset quality and analysing the effect of membership size on asset quality. Methodology: The research employs secondary panel data collected from audited financial reports of nine credit union chapters over the period 2021–2025, totaling 49 observations. The analysis utilizes fixed-effects panel regression models, with validation through Hausman tests, diagnostic checks for autocorrelation and heteroskedasticity, normality and stationarity tests. Findings: Findings indicate that compliance with COBAC norms and effective liquidity management significantly improve asset quality, while the effect of membership size is marginally negative. The findings also reveal a consistent upward trend in asset quality over the years, driven by external and internal factors. Unique Contribution to Theory, Policy and Practice: Based on these intuitions, the study contributes in strengthening regulatory adherence through internal controls, enhancing liquidity management via strategic reserves, stress testing and the careful management of membership growth to leverage economies of scale without overstretching resources. Overall, the findings contribute on emphasising the importance of a comprehensive, multi-stakeholder approach to foster sector resilience and improve asset quality in Cameroon’s credit unions.

Keywords: Asset quality; Credit Unions; Institutional Resilience; Liquidity Management; Membership Size; Regulatory Compliance (search for similar items in EconPapers)
Date: 2025
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