Work

Regulation, institutional quality, and stability of the banking system in West African Economic and Monetary Union

Year: 2023

Type: article

Abstract: This study investigates the relationship between prudential regulation and banking risk in the West African Economic and Monetary Union contingent on institutional quality. The empirical analysis employed panel data from 63 banks spanning 2006-2019. The key findings reveal that stringent banking regulations and supervision enhance banks' stability. Capital regulations, activity restrictions, and supervisory authorities reduce the risk of bank insolvency. The results suggest that a favorable institutional climate promotes rigorous enforcement of regulatory standards and robust supervision, thereby amplifying their efficacy. Overall, this study concludes that prudential policies exhibit risk-mitigating effects in West African Economic and Monetary Union countries conditional on sound institutional frameworks.

Source: Cogent Economics & Finance

DOI: 10.1080/23322039.2023.2256127

Authors: Koffi Sodokin, Essowaba Egbeleo, Richard Kuessi, Mawuli Kodjovi Couchoro, Akoété Ega Agbodji

Institution: University of Lomé

Language: English

Topic: Banking stability, regulation, efficiency

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: gold

Estimated APC paid: $1,165