Research On The Excess Liquidity In Banks Of The Countries Of The Economic And Monetary Community Of Central Africa

I am MADOUKA KOUMOU ROQUIA FANE(Ren Kefu),a student who comes from the Congo.I have studied finance in the Capital University of Economics and Business for 5years,finishing the teaching plan of all courses.Because of the certain interest on countries of the economic and monetary community of central Africa,I decided to choose this as my paper topic.In addition,due to the difference about language and culture,there may be a lot of deficiencies in the whole text,I hope the teacher can understand.The countries of the economic and monetary community of central Africa(known as CEMAC in French)are characterized for several years by the situation of bank liquidity excess,and that situation has become a quasi-structural problem which impedes the economic development of these countries(these countries are broadly rich in natural resources).Therefore,the aim of this thesis is to find necessary solutions to cope with the problem of bank liquidity excess faced by CEMAC countries.To this end,it was question first to make a full analysis on the notion of banking liquidity because it is important to understand what banking liquidity is and to see its importance in a Bank before talking about bank liquidity excess,insofar as the banking liquidity is at the origin of the existence of a bank.After that,it was necessary to identify the determinants of bank liquidity excess in CEMAC countries.To do this,it was necessary to use the GMM estimation,and it allowed us to show that the situation of bank liquidity excess in CEMAC countries is due to two essential factors,namely the precaution motive of commercial banks and exogenous factors(oil boom and other natural resources).Indeed,the precaution motive of commercial banks can be explained by the consequences of the financial and economic crisis experienced by the countries of CEMAC in the 1980 s,the restructuring of banking system,the instability of banking deposits and the uncertainty related to a strong deterioration of business climate in CEMAC countries.The exogenous factors explaining the bank liquidity excess are represented by the oil boom known by these countries for many years which increased reserves excess of banks.However,these surpluses have not been absorbed in the economy of the subregion due to the lack of reliable financial instrument.The exploitation of other natural resources(wood,ore,etc.)contributed also to the increase in reserves excess of banks.After that,the monetary policy conducted by CEMAC countries was analyzed,by identifying the more operational transmission channels of monetary policy in these countries.To this end,the use of the SVAR model enabled us to highlight the weakness of the transmission channels and an asymmetry of the impact and deadline of monetary policy actions over economic activity.The transmission channels are virtually inoperative in CEMAC countries,with the exception of the credit canal.But its effectiveness is reduced in the presence of bank liquidity excess faced by CEMAC countries.The use of a VAR in a panel enabled us to confirm the weakness of the transmission channels of monetary policy in CEMAC countries.Taking into account all that has been said,it seemed very important to finish our work by some recommendations which will allow us to solve the problem of bank liquidity excess which hinder the economic development of CEMAC countries.The recommendations were made in three areas,namely: the financial sector represented by banks,the public sector represented by the State and finally the private sector represented by economic agents.It is important to point out that,if all those measures are followed and respected,they would allow stemming bank liquidity excess and may lead CEMAC countries towards a sustainable economic development.