Bank competition and maturity of loans in WAEMU countries
Keywords:
Banking competition, loan maturity, FMOLSAbstract
This study aims to empirically evaluate the effect of bank competition on the maturity of bank credit in the countries of the West African Economic and Monetary Union (WAEMU). This objective was achieved by using a relatively recent econometric method, namely FMOLS, on a sample of 7 countries in the union over the period 1996-2021. The results of the estimation reveal that in the long term, in the presence of strong competition, banks will favour their relations with their customers by offering long-term loans. On the other hand, when competition is weak, banks will opt for short-term credit. These results, therefore, validate the predictions of the market power hypothesis.
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