Does Financial Development Spur Macroeconomic Policy Efficiency in the
Cemac Countries? An Empirical Evaluation
Samba MC* and Mbassi C
University of Yaounde, Yaounde, Cameroon.
- Corresponding Author:
- Samba MC
University of Yaounde
E-mail: [email protected]
Received Date: May 06, 2016; Accepted Date: May 25, 2016; Published Date: May 31, 2016
Citation: Samba MC, Mbassi C (2016) Does Financial Development Spur
Macroeconomic Policy Efficiency in the Cemac Countries? An Empirical Evaluation.
Bus Eco J 7:216. doi:10.4172/2151-6219.1000216
Copyright: © 2016 Samba MC, et al. This is an open-access article distributed
under the terms of the Creative Commons Attribution License, which permits
unrestricted use, distribution, and reproduction in any medium, provided the
original author and source are credited.
The main intent of this paper is to determine the extent to which financial development has contributed to the efficiency of macroeconomic policy, better represented by monetary policy, in the CEMAC area in the period spanning from 1986 to 2009. For this purpose, we use a methodology provided by Krause and Rioja (2006). These authors develop a methodology in which they derive policy efficiency measures and then assess how these measures are influenced by useful indicators of financial development. Our results show that the efficiency of the BEAC monetary policy is mixed among the CEMAC countries. While policy efficiency has improved in some countries, it has rather stagnated or declined in others. On the other hand, of the three measures of financial development used, only the measure for financial deepening is positively related to monetary policy efficiency. Our main indicator of financial development
namely, domestic credit by banks to private sector as a percentage of GDP has any impact on the efficiency of monetary policy in the CEMAC area. Moreover, while the peg of the CFA Franc to the euro appears to have enhanced policy efficiency, the devaluation of the same currency rather impeded monetary efficiency in the CEMAC area.