Banking consolidation and credit availability for small medium enterprises : evidence from CAMEU countries

Abstract

This article deals with the question whether the process of banking consolidation worsens small medium enterprises (SME) access to credit in Central African Monetary and Economic Union (CAMEU). We utilized cross-sectional data originated from post consolidation banks in CAMEU over the period 1990 to 2010. From a pooled regression in panel data analysis, we find—contrary to public fear—that banking consolidation in CAMEU does not have a significant negative impact on the financing of small medium enterprises. In particular, our results confirm that consolidation process induced changes in banks structure in terms of size and capitalization which positively influence availability of credit for small medium enterprises in the Union. For policy, the need to strengthen the CAMEU banking system becomes fundamentals if the potentials of the bank consolidation exercise will be fully realized.