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Efficiency of financial micro intermediation in the WAEMU countries: A stochastic frontier production analysis

  • BABATOUNDE, Latoundji Alain

This paper investigates the efficacy and technical efficiency of financial micro intermediation in the productive process of the WAEMU economies over the period 2002-2007 using a stochastic frontier production model with technical inefficiency effects. Four specific variables of the financial dualism deepening and the financial micro intermediation are considered: the ratio of microcredit to GDP, the microcredit growth rate, the share of microcredit in the economy financing due to the private sector and the agents preference for decentralized deposits. Our findings show that the four variables have positive effect on technical efficiency with 0.6 of semi-elasticity estimated on average whereas bank loans have on average only 0.3 on average. We conclude that the financial micro intermediation development which results from the financial dualism deepening makes it possible to almost double increase the productive efficiency in WAEMU area.

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File URL: http://mpra.ub.uni-muenchen.de/33446/1/MPRA_paper_33446.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 33446.

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Date of creation: 2010
Date of revision: Aug 2011
Handle: RePEc:pra:mprapa:33446
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  1. van Wijnbergen, Sweder, 1983. "Credit policy, inflation and growth in a financially repressed economy," Journal of Development Economics, Elsevier, vol. 13(1-2), pages 45-65.
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  9. SODOKIN, Koffi, 2006. "La fonction monétaire des institutions de microfinance et leurs relations de complémentarité avec les banques officielles dans les pays en développement," LEG - Document de travail - Economie 2006-08, LEG, Laboratoire d'Economie et de Gestion, CNRS, Université de Bourgogne.
  10. Diamond, Douglas W, 1984. "Financial Intermediation and Delegated Monitoring," Review of Economic Studies, Wiley Blackwell, vol. 51(3), pages 393-414, July.
  11. Pierre-Guillaume Méon & Laurent Weill, 2004. "Does better governance foster efficiency? An aggregate frontier analysis," Economics of Governance, Springer, vol. 6(1), pages 75-90, January.
  12. Philip Arestis & Georgios Chortareas & Evangelia Desli, 2006. "Financial Development And Productive Efficiency In Oecd Countries: An Exploratory Analysis," Manchester School, University of Manchester, vol. 74(4), pages 417-440, 07.
  13. Tanimoune, Nasser Ary, 2007. "Système financier dualiste et impacts des politiques financières : essai de modélisation," L'Actualité Economique, Société Canadienne de Science Economique, vol. 83(1), pages 55-70, mars.
  14. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-32.
  15. Nissanke, Machiko K, 2001. "Financing Enterprise Development in Sub-Saharan Africa," Cambridge Journal of Economics, Oxford University Press, vol. 25(3), pages 343-67, May.
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