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Bank Profitability and Monetary Policy Transmission in Cameroon

Author

Listed:
  • Marcel Takoulac Kamta

    (University of Bamenda, HICM, Cameroon)

  • Willi Verlaine Dongho Wamba Tejio

    (University of Bamenda, HICM, Cameroon)

  • Dinah Gembom Phungeh

    (University of Bamenda, HICM, Cameroon)

  • Gautier Tchoffo Tameko

    (University of Dschang, FSEG, Dschang, Cameroon)

Abstract

This study aims to evaluate the effect of bank profitability on the monetary policy transmission of the Bank of Central African States (BEAC). In order to accomplish this, we conducted a panel data analysis using a sample of 12 commercial banks that were active in Cameroon over the period 2010-2021. The Credit National Council of Cameroon provided the data used in this study. The Fully Modify Ordinary Least Square (FMOLS) and Dynamic Ordinary Least Square (DOLS) methods are used to estimate our model. We find that the most profitable banks are less sensitive to the restrictive monetary policy shocks than those with low profitability. This result shows that bank’s profitability negatively affect the effectiveness of monetary policy. Consequently, we advise BEAC to promote the entry of new commercial banks into the Cameroon financial sector. This will lead to a decline in bank profitability while also raising bank sensitivity to change in monetary policy.

Suggested Citation

  • Marcel Takoulac Kamta & Willi Verlaine Dongho Wamba Tejio & Dinah Gembom Phungeh & Gautier Tchoffo Tameko, 2023. "Bank Profitability and Monetary Policy Transmission in Cameroon," Economic Research Guardian, Mutascu Publishing, vol. 13(2), pages 72-81, December.
    • Handle: RePEc:wei:journl:v:13:y:2023:i:2:p:72-81
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Bank profitability; Credit channel; Monetary policy; Dynamic panels; DOLS;
    All these keywords.

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • 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

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