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Back Matter

Back Matter

Patrick Imam, and Christina Kolerus
Published Date:
October 2013
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    This section describes mostly aggregate results at the WAEMU level. They may mask significant heterogeneity across countries.

    Access to finance refers to the possibility that individuals or enterprises can access financial services, including credit, deposit, payment, insurance, and other risk management services (Demirgüç-Kunt, Beck, and Honohan, 2008).

    Benin: 2012 Article IV Consultation and Fourth Review under the Extended Credit Facility Arrangement—Staff Report and Staff Supplements, IMF Country Report No. 13/9. Senegal: Staff Report for the 2012 Article IV Consultation, Fourth Review under the Policy Support Instrument, and Request for Modification of an Assessment Criterion—Staff Report and Supplements, IMF Country Report No. 12/337.

    The Senegal pilot study showed that smaller banks in Senegal were highly exposed to sovereign risk (Imam and Koleras, 2013).

    For example, in Benin, authorized MFIs serve 1.5 million customers in a total active population of 4.5 million.

    This follows from the mutual structure, which raises collective action problems, particularly for institutions with a large number of members. Also management skills and training seem less developed than in the banking system.

    This exercise considers only the banking market, debt and equity markets, and some nonbank financial institutions. Due to limitations in the dataset, microfinance could not be benchmarked against the statistical median.

    The structural benchmarks are calculated based on Beck, Demirgüç-Kunt, and Levine (Beck, Thorsten, Asli Demirgüç-Kunt, and Ross Levine, 2010, “Financial Institutions and Markets across Countries and over Time: The Updated Financial Development and Structure Database,” World Bank Economic Review, Vol. 24(1), pp. 77—92) and FinStats from the World Bank. Using a large dataset of countries, each financial indicator was regressed on a set of structural characteristics, such as GDP per capita and its square, population size and density, the age dependency ratio and country-specific dummies, and year fixed effects. These regressions are expected to be updated regularly.

    See Box 1 in the staff report and Imam and Koleras, 2013, for a more detailed discussion on these issues.

    This could also reflect the fact that the BCEAO did not need to use intensively its foreign exchange reserves to defend the peg under the existing exchange rate arrangement.

    Based on a stylized presentation for low-income countries in Prachi Mishra, Peter J. Montiel, and Antonio Spilimbergo (2012), “Monetary Transmission in Low-Income Countries: Effectiveness and Policy Implications,” IMF Economic Review, Vol. 60, pp. 270—302.

    Lending rates in Senegal and Benin, the two countries with negative correlations, are the lowest (Senegal) and the highest (Benin) in the region (see Figure 11), suggesting that factors other than policy rates have an important impact on interest rate formation. The lower level of lending rates in Senegal, for instance, can be partially explained by stronger competition in the Senegalese banking market (relative to the region). Benin experienced a crisis in the banking system and the breakdown of a Ponzi scheme in the late 2000s.

    Another reason for the high average liquidity in the banking system may have been the design of the transformation ratio, which constrained longer-term lending.

    There are, however, a number of companies in the WAEMU that are rated above investment grade. These companies currently use their ratings to improve their credit conditions vis-à-vis banks rather than issuing on the securities market.

    One private institution based in Abidjan and BOAD, the region’s development bank.

    Nigeria’s recent decision to adopt a regulation forbidding its banks to support their subsidiaries in case the capital requirements of the subsidiaries are to be increased and/or when they are making losses casts doubt on the effectiveness of some of these arrangements.

    They have been harmonized a few years ago and therefore cannot be used to address asymmetric shocks.

    The authorities are also working on an insurance fund to guarantee all payments made through the RTGS system.

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