Journal of
Economics and International Finance

  • Abbreviation: J. Econ. Int. Finance
  • Language: English
  • ISSN: 2006-9812
  • DOI: 10.5897/JEIF
  • Start Year: 2009
  • Published Articles: 352

Article in Press

Capital, Risk and Efficiency tradeoffs in Cameroonian Banking

Eze Eze Donatien and Otombaye Allandigar

  •  Received: 31 January 2022
  •  Accepted: 20 May 2022
This paper analyses the relationship between capital, risk and efficiency for a sample of 10 Cameroonian banks between 2014 and 2020. To reach our target, we specify a system of equations and estimate these using the Two Stage Least Squares panel data estimator technique. As a result, our empirical analysis shows that increases of bank capital do not reduce risk taking in Cameroonian commercial banks. Moreover, cost efficiency does not explain risk taking in the Cameroonian commercial banks. There is however a negative impact of change in risk taking on bank cost efficiency. Finally, changes in bank capital contributes positively to the yearly change in bank efficiency. Hence, policies aiming at ensuring that bankers are not tempted to game the rules or inducing commercial banks behavior towards injection of more capital might help improving bank efficiency and stability in this country.

Keywords: financial reforms in banking, bank capital, risk, efficiency, Cameroonian banks.