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

How to Cite

DOMBOU T., D. R., & TANGA T., A. (2019). SOE’s vs private enterprises and the efficient management of credit risk in CEMAC. Journal of Economics Bibliography, 6(3), 273–287. https://doi.org/10.1453/jeb.v6i3.1949

Abstract

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.
https://doi.org/10.1453/jeb.v6i3.1949
PDF

References

Acharya, V., & Xu, Z. (2017). Financial dependence and innovation: The case of public versus private firmsol. Journal of Financial Economics, 124(2), 223-243. doi. 10.1016/j.jfineco.2016.02.010

Afzal, A., Raja, R., Imran, U.C., & Saima, S. (2018). Interest rate and financial performance of banks in Pakistan. International Journal of Applied Economics, Finance and Accounting, 2(1), 1-7. doi. 10.33094/8.2017.2018.21.1.7

Aggarwal, R., & Jacques, K. (1998). Assessing the impact of prompt corrective action on bank capital and risk. Economic Policy, 4, 23-32.

Akerlof. (1970). The market for "lemons": Quality uncertainty and the market mechanism. The Quarterly Journal of Economics, 84(3), 488. doi. 10.2307/1879431

Armstrong, A., Jia, X., & Totikidis, V. (2005). Parallels in private and public sector governance. Contemporary Issues in Governance, 5(1), 28-30.

Arriaga, C., & Miranda, L. (2009). Risk and efficiency in credit concession: A case study in Portugal. Managing Global Transitions, 7(3), 307-326.

Avom, D., & Eyeffa Ekomo, S. M.-L. (2007). Quinze ans de restructuration bancaire dans la CEMAC: Qu’avons-nous appris?. Revue d'Economie Financière, (89), 183-205. doi. 10.3406/ecofi.2005.3935

Bany, R.F. (2015). Les activités de hors bilan améliorent-elles l’efficience bancaire? Une vérification empirique dans le cas de la CEMAC. Journal of Economics and Development Studies, 3(3), 19-35. doi. 10.15640/jeds.v3n3a3

Berger, A., & Humphrey, D. (1997). Efficiency of financial institutions: international survey and directions for future research. Finance and Economics Discussion Series. [Retrieved from].

Clark, J.A. (1996). Market structure, risk and profitability: The quite-life hypothesis revisited. Quarterly Review of Economics, and Business, 36(1), 45-56.

COBAC. (2014). Rapport Annuel d'Exercice.

Cull, R., & Xu, L.C. (2003). Who gets credit? The behavior of bureaucrats and state banks in allocating credit to Chinese state-owned enterprises. Journal of Development Economics, 71(2), 533-559. doi. 10.1016/S0304-3878(03)00039-7

Dierkes, E.C., Langer, T., & Norden, L. (2013). Business credit information sharing and default risk of private firms. Journal of Banking & Finance, 37(8), 2867-2878. doi. 10.1016/j.jbankfin.2013.03.018

Djankov, S., McLiesh, C., & Shleifer, A. (2007). Private credit in 129 countries. Journal of Financial Economics, 84(2), 299–329. doi. 10.1016/j.jfineco.2006.03.004

Drobetz, W., Janzen, M., & Meier, I. (2016). Investment and financing decisions of private and public firms. 29th Australasian Finance and Banking Conference. doi. 10.1111/jbfa.12367

Eloundou, E.F., & Befen Djinja, D.M. (2016). Internal mechanisms of governance and risk bearing of banks: The case of the CEMAC zone. International Journal of Financial Research, 7(5), 190-202. doi. 10.5430/ijfr.v7n5p190

Fouda, O. (2009). La surliquidité des banques en zone franc: comment expliquer le paradoxe de la CEMAC. Revue Africaine D'intégration, 3(2), 43-90. doi. 10.5539/ijef.v6n6p127

Hugon, A. (2007). Rentabilité du secteur bancaire et défaillances du financement du développement: le cas de la CEMAC. Revue Tiers Monde, 192(4), 771-788. doi. 10.3917/rtm.192.0771

Huynh, K., Paligorova, T., & Petrunia, R. (2013). Public/private transitions and firm financing. Bank of Canada Staff Working Papers, No.2013-36. [Retrieved from].

Iannota, G., Nocera, G., & Sironi, A. (2007). Ownership structure, risk and performance in the European banking industry. Journal of Banking and Finance, 31(7), 2127-2149. doi. 10.1016/j.jbankfin.2006.07.013

IMF. (2014). Central African economic and monetary community. Washington, DC: IMF Country Report, No.14/305. [Retrieved from].

International Monetary Fund. (2018). Cameroon. IMF Country Report No.18/256. [Retrieved from].

Jacques, K., & Nigro, P. (1997). Risk-based capital, portfolio risk, and bank capital: A simultaneous equations approach. Journal of Economics and Business, 49(6), 533–547. doi. 10.1016/S0148-6195(97)00038-6

Koju, L., Koju, R., & Wang, S. (2018). Does banking management affect credit bisk? Evidence from the Indian banking system. International Journal of Financial Studies, 6(3). 67-78. doi. 10.3390/ijfs6030067

La Porta, R., López-de-Silanes, F., Shleifer, A., & Vishny, R. (1997). Legal determinants of external finance. Journal of Finance, 52(3), 1131–1150. doi. 10.1111/j.1540-6261.1997.tb02727.x

Loscocco, K., & Robinson, J. (1991). Barriers to women's small-business success in the United States. Gender & Society, 5(4), 511-532. doi. 10.1177/089124391005004005

Ningaye, P., Madaha, Y.M., & Nembot, N.L. (2014). Competition and banking efficiency in the CEMAC zone. International Journal of Economics and Finance, 6(6), 127-139. doi. 10.5539/ijef.v6n6p127

Nyström, K. (2008). The institutions of economic freedom and entrepreneurship: evidence from panel data. Public Choice, 136(3-4), 269–282. doi. 10.1007/s11127-008-9295-9

Odunga, R., Nyangweso, P., Carter, D., & Mwarumba, M. (2013). Credit risk, capital adequacy and operating efficiency of commercial banks in Kenya. International Journal of Business and Management Invention, 2(9), 6-12.

Onaolapo, A. (2012). Analysis of credit risk management efficiency in Nigeria commercial banking sector. Far East Journal of Marketing and Management, 2(4), 39-52.

Salim, R., Arjomandi, A., & Dakpo, H. (2017). Banks' efficiency and credit risk analysis using by-production approach: the case of Iranian banks. Applied Economics, 49(30), 1-15. doi. 10.1080/00036846.2016.1251567

Sealey, C., & Lindley, J.T. (1977). Inputs, outputs, and a theory of production and cost at depository financial institutions. Journal of Finance, 32(4), 1251-1266. doi. 10.2307/2326527

Sharp, C. (1951). Public and private financing of industrial enterprise. The Economic Journal, 61(244 ), 804-811. doi. 10.2307/2226982

Shirley, M., & Walsh, P. (2000). Public versus private ownership: The current state of the debate. The World Bank. [Retrieved from].

Short, B. (1979). The relationship between commercial bank profit rates and banking concentration in Canada, Western Europe and Japan. Journal of Banking and Finance, 3(3), 209-219. doi. 10.1016/0378-4266(79)90016-5

Shrieves, R., & Dahl, D. (1992). The relationship between risk and capital in commercial banks. Journal of Banking and Finance, 16(2), 439- 457. doi. 10.1016/0378-4266(92)90024-T

Yong, T., & Christos, F. (2018). Risk, competition and efficiency in banking: Evidence from China. Global Finance Journal, 35(3), 223-236. doi. 10.1016/j.gfj.2017.12.001

Creative Commons License
This article licensed under Creative Commons Attribution-NonCommercial license (4.0)

Downloads

Download data is not yet available.