Abstract
This chapter examines the issue of banking sector integration and competition in CEMAC, with a focus on the integration of products and services in retail banking, as financial markets are limited in size (Box 10.1). A common currency and monetary policy and the adoption of a common set of convergence criteria for the monetary union may be expected to lead to a process of financial integration. Banking sector integration can be viewed as a process of convergence into a single market for banking products and services, where all buyers and sellers within CEMAC have opportunities to transact on the most favorable terms. However, integration may not materialize because a number of factors have to be taken into account: (1) incentives of the economic agents to operate in other countries within CEMAC; (2) institutional conditions of the countries of origin and reception (for instance in terms of property rights protection); and (3) impact of the regulatory framework, especially in the case of banking markets. This chapter assesses the degree of integration achieved by the banking systems in CEMAC, explores the major obstacles to further integration, and seeks to quantify the effects of integration on the efficiency and profitability of banks.
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