Is Banking Concentration in CEMAC Socially Optimal?

The objective of this paper is to verify whether the structure of the CEMAC banking market tends towards a socially optimal concentration. The theoretical basis of this study is built around the debate between structuralists and Chicago School advocates. In order to carry out this work, we draw on the models of Chauveau and Saidane (1991) and Mirzaei and Moore (2014). The study covers all CEMAC countries over the period 2002-2019. The selected model is estimated by the lagged OLS of its explanatory variables and the 2SLS. We obtain the robust result that the structure of the CEMAC banking market does not tend towards a socially optimal concentration. In fact, banking concentration and control of corruption hinder competition among banks and hence, reduce satisfaction of customers. This occurs because CEMAC banking concentration was achieved through external growth instead of banks ‘efficiency. To this end, economic policy recommendations for further bank restructuring in CEMAC are proposed.