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Economic resilience under COVID-19 in the CEMAC zone: Are procyclical adjustments of capital requirements necessary?

Author

Listed:
  • Alim BELEK
  • Djimoudjiel DJEKONBE
  • Anatole Toinar MOGOTA

    (CEMAC Zone)

Abstract

This paper analyzes the effects of procyclical regulatory capital adjustments on the ability of CEMAC economies to recover from the COVID-19. To achieve the objective, it uses quarterly data from 2005 to 2020 and Generalized Least Squares estimators as a technique. The results obtained show that the severity of the COVID-19 significantly impacted the economies of the sub-region and their ability to be resilient. Further, the results are robust regardless of the economic resilience indicator considered. Pro-cyclical capital adjustments in the pandemic context have a positive impact on resilience, thereby reducing exposure to economic vulnerabilities. It is advisable to promote countercyclical adjustments of regulatory capital to improve economic resilience. This is regardless the fact that under COVID-19, economic contractions may induce banks to adopt more pro-cyclical behavior in order to reduce the vulnerability of economies.

Suggested Citation

  • Alim BELEK & Djimoudjiel DJEKONBE & Anatole Toinar MOGOTA, 2022. "Economic resilience under COVID-19 in the CEMAC zone: Are procyclical adjustments of capital requirements necessary?," Journal of Economics Library, EconSciences Journals, vol. 9(3), pages 159-177, September.
    • Handle: RePEc:cvv:journ5:v:9:y:2022:i:3:p:159-177
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    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative

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