Journal of Economics and Development Studies

Bank Capital and Credit Supply: Evidence from Commercial Banks in Ivory Coast
Séraphin Prao YAO, Kamalan Eugène

Abstract
The aim of this paper is to examine the impact of the minimum capital requirements of commercial banks on credit supply in Ivory Coast, over the period from 2004 to 2015. To this end, the study was conducted from a panel of 14 Ivorian banks. From a GLS model, the results reveal that the increase in bank capital positively influences credit supply. However, the effects of capital increase on credit supply are annihilated by banking risk. Thus, the West African Economic and Monetary Union (WAEMU) Banking Commission needs to increase supervision so that banks can meet the minimum level of capital required to guarantee the solvency and resilience of the Ivorian banking system. In terms of the implications of economic policies, monetary authorities must enforce and respect the policy of raising the bank minimum capital requirements. They should also encourage banking concentration in Ivory Coast, since the share of the five big banks positively influences credit supply.

Full Text: PDF     DOI: 10.15640/jeds.v6n3a7