Research Article Open Access
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.
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Author(s): Samba MC, Mbassi C
Financial development, Policy efficiency, Demand shock,Supply shock, CEMAC, Accounting Review, International Business, Indexation, Profitability, Time Series, Panel Data, Empirical Analysis, Stock Market Returns, Human Capital, Monetary Policy , Small Firms, Business Cycle, Banking Research Studies, Capital Structure, Economics Studies, Financial plan, Fiscal and tax policies , Avenues of Investment, Wealth Management, Business Theory, Organizational studies, Parameter Estimation