Empirical Research CEMAC National Bank Of Excess Liquidity

The holding by Banks of a certain volume of liquidity can theoretically be explained by theneed to ensure the liquidity of the economy. Surprisingly, banks from the CEMAC zonehave been carrying excess liquidity for the last fifteen years while funds available tofinance growth are on the decrease. To overcome this problem, our thesis firstly identifiesthe determinants of excess liquidity in developing countries by studying the case ofCEMAC member countries from1985to2002. The GMM estimator used has shown thatthe excess liquidity in Central Africa derived from both the prudence of commercial banksand exogenous factors. The precaution of Commercial Banks can be explained by thefinancial crisis in1980s, the restructuring of the banking system, the instability of depositsand a very risky economic environment. The increasing in oil prices fueling excessreserves due to the low absorption capacity of countries in the region. Secondly, we discusson the transmission channels in Central Africa. The VAR model used has shown that theinterest rate channel is the lowest. This is caused by the lack of a financial market that doesnot allow ensuring the function of the recycling of liquidity and the transmission ofmonetary policy. Finally, we study the case of empirical study of commercial banks excessliquidity in China. This case study helps us to suggest some solutions to resolve CEMACbanks excess liquidity. We think that government’s securities can open market operationsrapidly; the banks of Central Africa countries need to encourage the implementation ofthose loans to the private sector to bear most of the financing to give tax incentives tocreate equity and security to the market; accelerate financial market development canefficiently solve the problem of excess bank liquidity; also the maximization of theproportion cash demands, namely the lower saving rate, banks liquidity will considerablyreduce.