Journal of Economics and Development Studies

Bank Capital and Credit Supply in African Countries: Evidence from Pooled Mean Group Estimation
Séraphin Prao YAO, Kamalan Eugène,Valery Mounoufié KOFFI

Abstract
This paper provides an empirical assessment of the relationship between bank capital adequacy requirements and the supply of bank credit in 15 African countries, over the period 2002 to 2015; using Pool Mean Estimator Group (PMG) advocated by Pesaran, Shin and Smith (1999). The Study concludes that the improvement of the Cooke ratio, the market share of the three banks and the growth rate of GDP per capita, positively influence bank credit granted to the private sector. In addition, the inflation rate negatively and significantly affects credit to the private sector. The study also notes that an increase in lending rates is unfavorable to the supply of credit. In the long run, no variable is significant. Other factors including institutional factors may influence the development of the private sector in the long term.

Full Text: PDF     DOI: 10.15640/jeds.v6n1a2