SOE’s vs private enterprises and the efficient management of credit risk in CEMAC

Dany R. DOMBOU T., Achille TANGA T.


Abstract. State owned-enterprises (SOEs) influence on CEMAC banking sector has grown considerably, with the potential of affecting both the banks and the private sector. This study aims to determine the influence of borrower’s nature on the improvement of credit risk in CEMAC Sub-region. The methodology used in the study consists of Data Envelopment Analysis and Tobit model. A panel dataset of the CEMAC countries from 2004 to 2014 is constructed from COBAC yearly reports, WDI and The Fraser Institute. The main findings from this research suggest that there is a negative and significant link between the tendency of CEMAC economies of using more private firms than SOEs investments and banking sector efficiency. The negative relationship is explained through weak CEMAC institutions.  This study, unlike others studies on banking performances, do not neglect the risk’s particular effect. Indeed, the study even determined the risk-efficiency as the efficiency of the bank in producing healthy loans.

Keywords. Bank efficiency; Credit Risk; Public enterprises; Private enterprises.

JEL. G28, G14, J16, L33.

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