Modelling Bank Lending in Cameroon Using Two Steps Cointegration Technique

Achamoh Victalice Ngimanang

doi:doi:10.11648/j.ijfbr.20241002.12

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Modelling Bank Lending in Cameroon Using Two Steps Cointegration Technique

Achamoh Victalice Ngimanang^*

Published in International Journal of Finance and Banking Research (Volume 10, Issue 2)

Received: 25 August 2023 Accepted: 20 March 2024 Published: 20 August 2024

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Abstract

This paper has as objective to model the key determinants of bank lending in Cameroon using time series data collected mainly from the World Bank database for the period spanning from 1979 to 2019. After exploring related theoretical and empirical literature, Engle and Granger two steps cointegration testing procedure was employed together with the necessary pretesting (unit root tests) and post estimation testing. Results of stationarity tests indicate that variable were a mixture of stationary and first difference. The lagged residual term possess unit root at level indicating that the variables are actually cointegarted and that ECM is relevant. The estimated cointegration regression model and the corresponding ECM were globally significant at one percent and the models were equally adequate with explanatory power of over 73 and 52 percent respectively. The results of the two models revealed that the effect of economic growth on bank lending was positive and highly significant, the effect of interest rate is negative and equally significant, then the effect of Gross Investment rate was also positive but not very significant in the short run. Based on the major findings, bank lending can be encouraged by stimulating the level of economic activities, by reducing interest rate on loans and by encouraging more investment projects.

Published in	International Journal of Finance and Banking Research (Volume 10, Issue 2)
DOI	10.11648/j.ijfbr.20241002.12
Page(s)	32-44
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Bank Lending, Cointegration Technique, Cameroon

References

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APA Style

Ngimanang, A. V. (2024). Modelling Bank Lending in Cameroon Using Two Steps Cointegration Technique. International Journal of Finance and Banking Research, 10(2), 32-44. https://doi.org/10.11648/j.ijfbr.20241002.12

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ACS Style

Ngimanang, A. V. Modelling Bank Lending in Cameroon Using Two Steps Cointegration Technique. Int. J. Finance Bank. Res. 2024, 10(2), 32-44. doi: 10.11648/j.ijfbr.20241002.12

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AMA Style

Ngimanang AV. Modelling Bank Lending in Cameroon Using Two Steps Cointegration Technique. Int J Finance Bank Res. 2024;10(2):32-44. doi: 10.11648/j.ijfbr.20241002.12

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@article{10.11648/j.ijfbr.20241002.12,
  author = {Achamoh Victalice Ngimanang},
  title = {Modelling Bank Lending in Cameroon Using Two Steps Cointegration Technique
},
  journal = {International Journal of Finance and Banking Research},
  volume = {10},
  number = {2},
  pages = {32-44},
  doi = {10.11648/j.ijfbr.20241002.12},
  url = {https://doi.org/10.11648/j.ijfbr.20241002.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20241002.12},
  abstract = {This paper has as objective to model the key determinants of bank lending in Cameroon using time series data collected mainly from the World Bank database for the period spanning from 1979 to 2019. After exploring related theoretical and empirical literature, Engle and Granger two steps cointegration testing procedure was employed together with the necessary pretesting (unit root tests) and post estimation testing. Results of stationarity tests indicate that variable were a mixture of stationary and first difference. The lagged residual term possess unit root at level indicating that the variables are actually cointegarted and that ECM is relevant. The estimated cointegration regression model and the corresponding ECM were globally significant at one percent and the models were equally adequate with explanatory power of over 73 and 52 percent respectively. The results of the two models revealed that the effect of economic growth on bank lending was positive and highly significant, the effect of interest rate is negative and equally significant, then the effect of Gross Investment rate was also positive but not very significant in the short run. Based on the major findings, bank lending can be encouraged by stimulating the level of economic activities, by reducing interest rate on loans and by encouraging more investment projects.
},
 year = {2024}
}

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TY  - JOUR
T1  - Modelling Bank Lending in Cameroon Using Two Steps Cointegration Technique

AU  - Achamoh Victalice Ngimanang
Y1  - 2024/08/20
PY  - 2024
N1  - https://doi.org/10.11648/j.ijfbr.20241002.12
DO  - 10.11648/j.ijfbr.20241002.12
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 32
EP  - 44
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20241002.12
AB  - This paper has as objective to model the key determinants of bank lending in Cameroon using time series data collected mainly from the World Bank database for the period spanning from 1979 to 2019. After exploring related theoretical and empirical literature, Engle and Granger two steps cointegration testing procedure was employed together with the necessary pretesting (unit root tests) and post estimation testing. Results of stationarity tests indicate that variable were a mixture of stationary and first difference. The lagged residual term possess unit root at level indicating that the variables are actually cointegarted and that ECM is relevant. The estimated cointegration regression model and the corresponding ECM were globally significant at one percent and the models were equally adequate with explanatory power of over 73 and 52 percent respectively. The results of the two models revealed that the effect of economic growth on bank lending was positive and highly significant, the effect of interest rate is negative and equally significant, then the effect of Gross Investment rate was also positive but not very significant in the short run. Based on the major findings, bank lending can be encouraged by stimulating the level of economic activities, by reducing interest rate on loans and by encouraging more investment projects.

VL  - 10
IS  - 2
ER  -

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Achamoh Victalice Ngimanang

Higher Technical Teachers Training College, University of Bamenda, Bamenda, Cameroon

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Ngimanang, A. V. (2024). Modelling Bank Lending in Cameroon Using Two Steps Cointegration Technique. International Journal of Finance and Banking Research, 10(2), 32-44. https://doi.org/10.11648/j.ijfbr.20241002.12

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ACS Style

Ngimanang, A. V. Modelling Bank Lending in Cameroon Using Two Steps Cointegration Technique. Int. J. Finance Bank. Res. 2024, 10(2), 32-44. doi: 10.11648/j.ijfbr.20241002.12

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AMA Style

Ngimanang AV. Modelling Bank Lending in Cameroon Using Two Steps Cointegration Technique. Int J Finance Bank Res. 2024;10(2):32-44. doi: 10.11648/j.ijfbr.20241002.12

Copy | Download

@article{10.11648/j.ijfbr.20241002.12,
  author = {Achamoh Victalice Ngimanang},
  title = {Modelling Bank Lending in Cameroon Using Two Steps Cointegration Technique
},
  journal = {International Journal of Finance and Banking Research},
  volume = {10},
  number = {2},
  pages = {32-44},
  doi = {10.11648/j.ijfbr.20241002.12},
  url = {https://doi.org/10.11648/j.ijfbr.20241002.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20241002.12},
  abstract = {This paper has as objective to model the key determinants of bank lending in Cameroon using time series data collected mainly from the World Bank database for the period spanning from 1979 to 2019. After exploring related theoretical and empirical literature, Engle and Granger two steps cointegration testing procedure was employed together with the necessary pretesting (unit root tests) and post estimation testing. Results of stationarity tests indicate that variable were a mixture of stationary and first difference. The lagged residual term possess unit root at level indicating that the variables are actually cointegarted and that ECM is relevant. The estimated cointegration regression model and the corresponding ECM were globally significant at one percent and the models were equally adequate with explanatory power of over 73 and 52 percent respectively. The results of the two models revealed that the effect of economic growth on bank lending was positive and highly significant, the effect of interest rate is negative and equally significant, then the effect of Gross Investment rate was also positive but not very significant in the short run. Based on the major findings, bank lending can be encouraged by stimulating the level of economic activities, by reducing interest rate on loans and by encouraging more investment projects.
},
 year = {2024}
}

Copy | Download

TY  - JOUR
T1  - Modelling Bank Lending in Cameroon Using Two Steps Cointegration Technique

AU  - Achamoh Victalice Ngimanang
Y1  - 2024/08/20
PY  - 2024
N1  - https://doi.org/10.11648/j.ijfbr.20241002.12
DO  - 10.11648/j.ijfbr.20241002.12
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 32
EP  - 44
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20241002.12
AB  - This paper has as objective to model the key determinants of bank lending in Cameroon using time series data collected mainly from the World Bank database for the period spanning from 1979 to 2019. After exploring related theoretical and empirical literature, Engle and Granger two steps cointegration testing procedure was employed together with the necessary pretesting (unit root tests) and post estimation testing. Results of stationarity tests indicate that variable were a mixture of stationary and first difference. The lagged residual term possess unit root at level indicating that the variables are actually cointegarted and that ECM is relevant. The estimated cointegration regression model and the corresponding ECM were globally significant at one percent and the models were equally adequate with explanatory power of over 73 and 52 percent respectively. The results of the two models revealed that the effect of economic growth on bank lending was positive and highly significant, the effect of interest rate is negative and equally significant, then the effect of Gross Investment rate was also positive but not very significant in the short run. Based on the major findings, bank lending can be encouraged by stimulating the level of economic activities, by reducing interest rate on loans and by encouraging more investment projects.

VL  - 10
IS  - 2
ER  -

Copy | Download