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

Alain Babatoundé

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Financial micro intermediation; financial dualism; stochastic frontier; technical efficiency; WAEMU (search for similar items in EconPapers)
JEL-codes: D24 G21 J24 O12 (search for similar items in EconPapers)
Date: 2010, Revised 2011-08
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