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Banking Market Structure and Cost of Credit in the WAEMU

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  • PRAO Yao Séraphin
  • Bakayoko Mamadou

Abstract

This paper provides an empirical assessment of the relationship between the structure of the banking market and the cost of credit in the WAEMU. The analysis focuses on WAEMU countries except for Guinea-Bissau due to the lack of sufficiently long series. The study covers the period from 1996 to 2017. Using the fully modified ordinary least squares (FMOLS) method, we show that the banking market concentration ratio has a double effect on the cost of credit. First, the concentration ratio increases the cost of credit, and second, it decreases the cost of credit after reaching a threshold of 70 percent. Moreover, the results highlight the positive impact of the money market interest rate on the cost of credit. On the other hand, the inflation rate unexpectedly lowers the cost of credit in the WAEMU.

Suggested Citation

  • PRAO Yao Séraphin & Bakayoko Mamadou, 2020. "Banking Market Structure and Cost of Credit in the WAEMU," International Business Research, Canadian Center of Science and Education, vol. 13(8), pages 1-78, August.
    • Handle: RePEc:ibn:ibrjnl:v:13:y:2020:i:8:p:78
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    Cited by:

    1. Jiang, Lan & Wu, Tong, 2023. "Banking market structure and industrial structure: A transnational empirical study," Finance Research Letters, Elsevier, vol. 54(C).

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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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