Title:
FINANCIAL STRUCTURE, CAPITAL REGULATION AND BANKING RISK IN THE ECONOMIC AND MONETARY COMMUNITY OF CENTRAL AFRICAN STATES (CEMAC): ANALYSIS BY SIMULTANEOUS EQUATIONS IN PANEL DATA

Authors:
Gabriel ZOMO YEBE ,Gabon

Abstract:
The objective of this empirical work is to study the effectiveness of capital regulation and to identify the internal and external determinants of the behaviour of a panel of banks in Cameroon and Gabon, the two largest economies of CEMAC. To this end, we use a model of simultaneous equations to take into account the interrelationship between risk, capitalization and asset performance, as estimated by the system GMM method in Dynamic panel. Our results show that banks seem to have increased their capital and risk at the same time, but that this strategy has had the effect of diminishing their performance, given the low diversification of their portfolio. The regulatory pressure is not sufficient to influence the risk-taking behaviour of banks, which depends rather on the macroeconomic situation of the countries, in particular the level of growth and indirectly the situation of the oil sector. It hinders the capitalization of banks and acts positively on the return of assets.