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Does Bank Capital Increase the Productivity of the Banking Industry? A Critical Review

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  • André Arnaud ENGUENE

    (Department of Monetary and Banking Economics, Faculty of Economic and Management, University of Yaoundé II Soa, Cameroon)

Abstract

The purpose of this paper is to assess the level of productivity of the banking sector in the Central African Economic and Monetary Community based on the evolution of the level of minimum bank capital. This study used data from the annual reports and bulletins of the Central African Banking Commission, the database of the Bank of Central African States and the World Bank's Worldwide Government Indicators for 1998 to 2020. We opted for the estimation of the Malmquist index of total factor productivity based on data envelopment analysis on the one hand, and an estimation of the channels influencing productivity using the generalised method of moments in system on the other hand. This study finds that the minimum capital requirement for banks has a significant positive impact on industry productivity. In addition, the ownership structure and the socio-political framework influence the productivity of banks in the Central African Economic and Monetary Community.

Suggested Citation

  • André Arnaud ENGUENE, 2025. "Does Bank Capital Increase the Productivity of the Banking Industry? A Critical Review," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 14(3), pages 5-34.
    • Handle: RePEc:cbk:journl:v:14:y:2025:i:3:p:5-34
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    Keywords

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    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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