Claims, Deposits and Financial Conditions in DR Congo: Impact of COVID-19 on the Financial System

PINSHI, Christian P. (2023): Claims, Deposits and Financial Conditions in DR Congo: Impact of COVID-19 on the Financial System.

Abstract

The COVID-19 pass-through on the financial system runs at supersonic speed and undermines financial stability with a contraction of claims on the private sector, withdrawal of deposits, and tightening the financial conditions. The main objective of this study is to investigate the unprecedented impact of the coronavirus on the Congolese financial system. An autoregressive Vector Bayesian model is used to test the relationship. Monthly series data from December 2013 to April 2020 is used. The results show that the COVID-19 pandemic negatively affects the Congolese financial system at different magnitudes. To reduce the negative impact, the government of Congo should quickly adapt macroeconomic and financial policies by boosting and injecting liquidity in the banking sector. At the same time, the financial system landscape would be enhanced by the expansion of Fintechs on the one hand, and the expansion of cyberattacks on the other. To make the most of the digitalization of the financial system and enhance the effectiveness of cybersecurity, financial institutions should implement smart policies and invest in research. This study is the first to be done in Congo to the best knowledge of the authors and is considered as a battery for further research in Africa and the world.

• Item Type: MPRA Paper
• Language: English
• Keywords: COVID-19, Claims, Deposits, Financial conditions, Congolese Financial system, uncertainty
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy; G - Financial Economics > G1 - General Financial Markets > G18 - Government Policy and Regulation

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