Is the CEMAC Banking System Resilient to Macrofinancial Shocks ?

Le système bancaire de la CEMAC est-il résilient aux chocs macro- financiers ?

Désiré Avom, Fabien Clive Ntonga Efoua () and Etienne Inédit Blaise Tsomb Tsomb
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Désiré Avom: CEREG, Faculty of Economics and Management, University of Yaoundé 2 SOA
Fabien Clive Ntonga Efoua: CEREG, Faculty of Economics and Management, University of Yaoundé 2 SOA, CEDIMES - CEDIMES - Centre d'Etudes sur le Développement International et les Mouvements Economiques et Sociaux

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Abstract: This paper simulates some macro-financial shocks (increase in non-performing loans, high volatility of profits from the exploitation of natural resources, severe recession, explosion of the public debt and price instability) on a financial soundness indicator of which data are provided by the Bretton Woods institutions. To achieve this, we estimate a panel-SVAR model using the Least Square Dummy Variable (LSDV) method. Our results show that: (i) due to the weight of Cameroon in the sub-regional economy, the CEMAC banking system is actually resilient to deteriorating macro-financial conditions; (ii) its weak financial development prevents the spread of financial instability in the sub-region and (iii) the excess in liquidity which has been observed there for several years constitutes more a "safety cushion" than a performance indicator for the banking system. From these results, we formulate some economic policy recommendations, particularly with regard to the diversification of economies, the reduction in the CEMAC countries propensity to resort to debt, as well as cleaning up the investment in the sub region. We also suggest some research perspectives with a view to deepen the reflection.

Keywords: Macro-prudential tests; Overliquidity paradox; Panel-SVAR; LSDV; CEMAC; Tests macro-prudentiels; Paradoxe de la surliquidité; panel-SVAR (search for similar items in EconPapers)
Date: 2025-03-28
Note: View the original document on HAL open archive server: https://hal.science/hal-05057312v1
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Published in Revue de Stabilité Financière en Afrique Centrale (RSF-AC), 2025, pp.59-83

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