Effects of Banking Provisions on the Quality of Assets of Commercial Banks in the Central African Economic and Monetary Community (CEMAC): An Application by the Generalized Moments Method (GMM) — Oak Academic Publishing
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Effects of Banking Provisions on the Quality of Assets of Commercial Banks in the Central African Economic and Monetary Community (CEMAC): An Application by the Generalized Moments Method (GMM)
Laboratory of Economic and Social Research and Studies (LARES), Faculty of Economics, Marien N’Gouabi University, Brazzaville, Republic of Congo
1 Laboratory of Economic and Social Research and Studies (LARES), Faculty of Economics, Marien N’Gouabi University, Brazzaville, Republic of Congo
The main objective of this article is to analyze the impact of bank provisions on the asset quality of CEMAC commercial banks over the period 2004-2018 using panel data analysis and the generalized method of moments. The results of this study showed a strong positive relationship between bank provisions (PCS) and nonperforming loans (NPLs). Return on assets (ROA) and inflation showed a significant negative impact. However, the rate of gross domestic product (TxGDP), return on equity (ROE) and the ratio of deposits to loans (RCD) did not have a significant impact on NPLs. CEMAC commercial banks should anticipate high levels of capital losses when creating higher provisions, reducing the volatility of results and strengthening their solvency in the medium term.
KeywordsBankingProvisionsQuality of Assets
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