What lessons does the COVID-19 pandemic teach us about banking liquidity and information share in the CEMAC zone?

Djimoudjiel, Djekonbe and T. Rostand, Dany Dombu and MBATINA NODJI, NDILENGAR (2024): What lessons does the COVID-19 pandemic teach us about banking liquidity and information share in the CEMAC zone?

Abstract

The objective of this study is to assess the effect of COVID-19 on the situation of excess liquidity in the CEMAC zone. The results are obtained using Bayesian estimates of VAR models on monthly data on banks ranging from 2000 to 2020 for countries in CEMAC. The main results suggest the shock generated by the COVID-19 pandemic on the economy of the sub-region has contributed to bogging down the situation of excess liquidity. Indeed, on the one hand, the shock on bank liquidity is greater in the short than in the long term. On the other hand, the situation under COVID-19 led to an increase in credit in the first 6 to 8 months of 2020 followed by a drop in the level of risk hedging capital. The health policies adopted and the ensuing recession, on the other hand, significantly affected the level of bank deposits. The main recommendations consist of reducing the climate of information asymmetry by encouraging the implementation of credit registers and establishing policies to help borrowers.

• Item Type: MPRA Paper
• Language: English
• Keywords: Excess liquidity; Information sharing ; COVID-19; BVAR; CEMAC.
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information ; Mechanism Design; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E50 - General; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O55 - Africa

References

Acharya, V., and S. Steffen. "The risk of being a fallen angel and the corporate dash for cash in the midst of COVID." Rev. Corp. Finance Stud 10 (2020): 430–471.

Andrianarison, Francis, and Blaise Ehowe Nguem. "Effets socioéconomiques potentiels du COVID- 19 au Cameroun : une évaluation sommaire." Rapport PNUD, 2020.

Avom, Désiré, and Ekomo Sylvie Marie-Louise Eyeffa. "Quinze ans de restructuration bancaire dans la CEMAC : qu’avons-nous appris ?" Revue d'économie financière, no. 89 (2007): 183-205.

Bacale, Ivan. "La politique monétaire de la BEAC à l'épreuve de la crise : Quelques risques à relever." BEAC Lettre de la Recherche, 2021. Banque Mondiale. "Doing Business." Washington, 2020.

BEAC. Lettre de Recherche, 2e semestre. Yaoundé: BEAC, 2021.

BEAC. Situation du système bancaire de la CEMAC au 31 Décembre 2016. Yaoundé: Banque des Etats de l'Afrique Centrale (BEAC), 2016.

Bikaï, J. Landry, and Patrick-Nelson Daniel Essiane. "Politique monétaire, stabilité monétaire et croissance économique dans la CEMAC : une approche SVAR bayésienne." BEAC Working Paper, N° 08/17, 2017.

Borio, C. "The Prudential Response to the COVID-19 Crisis." Bank of International Settlements, 2020.

Calvin, A. "Surliquidité des banques dans la CEMAC et rationnement du crédit aux PME : que faire face à ce paradoxe ?" Ngaoundéré: BEAC - Université de Ngaoundéré, 2008.

Claessens, S., G. Dell'AAriccia, and L. Laevens . "Lessons and policy implication we have learnt from the global financial crisis." economic policy fiftiefth panel meeting, University Van Tilburg, October 2009: 23-24.

Danielson, M.G., and J.A. Scott. "Bank Loan Availability and Trade Credit Demand." The Financial Review 39 (2004): 579-600.

Demirgüç-Kunt, Asli, Alvaro Pedraza, and Claudia Ruiz-Ortega. "Banking sector performance during the COVID-19 crisis." Journal of Banking and Finance, 133, 2021.

Djankov, Simeon, Caralee McLiesh, and Andrei Shleifer. "Private credit in 129 countries." Journal of Financial Economics 84 (2007): 299–329.

Doumbia, Soumaila. "Surliquidité bancaire et « sous financement de l’économie » une analyse du paradoxe de l’UEMOA »." revue tiers monde, no. 205 (2011): 151-170.

Ganics, Gergely, and Florens Odendahl. "Bayesian VAR Forecasts, Survey Information and Structural Change in the Euro Area." Banque de France, Working paper N° 733, 2019.

Ghenimi, Ameni, and Mohamed Ali Brahim Omri. "Les déterminants du risque de liquidité dans les banques islamiques : cas de la région MENA." Edited by Elsevier. La Revue Gestion et Organisation 10 (2018): 127-136.

Gormsen, Niels Joachim, and Ralph S. J. Koijen. "Coronavirus: Impact on Stock Prices and Growth Expectations." Becker Friedman Institute for Economics Working Paper 22 (2020).

Jappelli, Tullio, and Marco Pagano. "Information sharing, lending and defaults: Cross-country evidence." Journal of Banking & Finance 26 (2002): 2017–2045.

Landier, Augustin, and David, Thesmar. "Earnings Expectations in the COVID Crisis." HEC Paris Research Paper, no. 1377 (2020).

Nzomo, Joseph, and Dany Dombou. "Stock markets, volatility and economic growth: evidence from Cameroon, Ivory Coast and Nigeria." Panorama Economico 12, no. 24 (2017): 145-175.

Onomo, Julie. "Les prêts non performants, indicateurs de stabilité financière en zone CEMAC." In Lettre de la Recherche de la BEAC, by BEAC, 11-13. 2021.

Ouédraogo, Salifou. Impact de la réglementation bancaire sur le comportement des banques de l'Union Economique et Monétaire Ouest Africaine (UEMOA). Burkina Faso: Thèse de Doctorat, Université Ouaga II, 2014.

Pagano, Marco, and Tullio Jappelli. "Information Sharing in Credit Markets." The Journal of finance XLVIII, no. 5 (1993).

Pessarossi, Pierre, and Laurent Weill. "Les exigences de fonds propres influencent-elles l'efficience des banques? leçon d'une expérience naturelle en Chine." revue économique, Vol 66, No. 3, Risque systémique et politiques, 2015: 505-520.

Ramelli, Stefano, and Alexander F. Wagner. "Feverish Stock Price Reactions to COVID-19." Review of Corporate Finance Studies 9, no. 3 (2020): 622–655.

Saxegaard, M. "Excess Liquidity and Effectiveness of Monetary Policy: Evidence from Sub-Saharan Africa." Edited by FMI. IMF Working Paper, no. WP/06/115 (2006).

Stiglitz, J, and A Weiss. "Credit Rationing in Markets With Imperfect information." The American Economic Review 71, no. 3 (1981): 393-410.

Triki, Thouraya, and Ousman Gajigo. "Credit Bureaus and Registries and Access to Finance: New Evidence from 42 African Countries." African Development Bank Working Paper Series, no. 154 (2012).

Valla, N., B. Saes-Escorbiac, and M. Tiesset. "Liquidité bancaire et stabilité financière." Revue de la stabilité financière (Banque de France), no. 9 (2006): 93-110.