TITLE:
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)
AUTHORS:
Elfy Deba Bangagnan Yanga
KEYWORDS:
Banking, Provisions, Quality of Assets
JOURNAL NAME:
Modern Economy,
Vol.15 No.4,
April
25,
2024
ABSTRACT: 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.