Economic resilience under COVID-19 in the CEMAC zone: Are procyclical adjustments of capital requirements necessary?

Alim Belek, Djimoudjiel Djekonbe and Anatole Toinar Mogota
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Anatole Toinar Mogota: CEMAC Zone

Journal of Economics Library, 2022, vol. 9, issue 3, 159-177

Abstract: This paper analyzes the effects of procyclical regulatory capital adjustments on the ability of CEMAC economies to recover from the COVID-19. To achieve the objective, it uses quarterly data from 2005 to 2020 and Generalized Least Squares estimators as a technique. The results obtained show that the severity of the COVID-19 significantly impacted the economies of the sub-region and their ability to be resilient. Further, the results are robust regardless of the economic resilience indicator considered. Pro-cyclical capital adjustments in the pandemic context have a positive impact on resilience, thereby reducing exposure to economic vulnerabilities. It is advisable to promote countercyclical adjustments of regulatory capital to improve economic resilience. This is regardless the fact that under COVID-19, economic contractions may induce banks to adopt more pro-cyclical behavior in order to reduce the vulnerability of economies.

Keywords: Economic resilience; COVID 19; CEMAC; Capital requirements. (search for similar items in EconPapers)
JEL-codes: C23 E51 G32 N20 O11 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:cvv:journ5:v:9:y:2022:i:3:p:159-177

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