West African Economic And Monetary Union Countries Research Articles

Heterogeneity effect of prudential regulation on the stability of banks: evidence from WAEMU banks using quantile regression with fixed effects

Purpose This paper aims to analyze the heterogeneous effect of prudential regulation on the stability of banks in the West African Economic and Monetary Union (WAEMU). Design/methodology/approach The author uses in this study individual bank data from balance sheets, income statements of banks in the WAEMU space and annual reports of the banking commission formed into a three-year panel from the period 2017 to 2019. First, this study uses hierarchical clustering based on specific banking characteristics to determine whether the WAEMU region’s banking markets are heterogeneous or not. Second, this study uses quantile regression approach with fixed effects to explore how that prudential regulation affects the conditional distribution of WAEMU bank stability. Findings The analysis reveals heterogeneity resulting in two distinct groups. Using the quantile regression approach, this study demonstrates that prudential regulation has a significantly more substantial and positive effect on the upper quantiles than on the lower quantiles of the conditional distribution of WAEMU bank stability. Furthermore, the effect of banking regulation also varies among pan-African cross-border banks, national banks and foreign banks. Among these types of banks, pan-African cross-border banks remain the most stable by adopting prudential regulation. The results remain robust and vary across different WAEMU countries. Originality/value The contribution of this study to the literature is multifaceted. First, this study uses individual bank-level constituted in panel data from the WAEMU region to assess the effect of prudential regulation on the stability of the WAEMU’s banking sector. This approach allows for a more granular analysis as this study considers individual regional banks’ specific characteristics and behaviors. Second, this study considers the heterogeneous effect of regulation on the stability of banks within the WAEMU space. This means that this study acknowledges that not all banks are affected similarly by prudential regulations, and this research aims to identify and quantify these differences.

Contribution of Islamic Finance to Inclusive Growth: A Comparative Study of the West African Economic and Monetary Union (WAEMU) and North African Countries

ABSTRACT Purpose — In recent years, economic growth in the West African Economic and Monetary Union (WAEMU) has been positive, but the precariousness of the population has remained virtually unchanged. Thus, the search for inclusive growth should be considered, and that is the subject of this comparative study to determine the contribution of Islamic finance to inclusive growth. Design/Methodology/Approach — First, this paper sets up an inclusive growth index to undertake a comparative study between WAEMU countries and North African countries before and after the integration of Islamic finance in order to examine the impact of Islamic finance in these countries. The paper then compares these two areas, WAEMU countries and North African countries, variable-by-variable, using a Student’s t-test over the period 2010–2023. The group of North African countries included in this study is found to have a high Islamic finance development indicator compared to the WAEMU zone. Findings — The results show that growth is more inclusive in North African countries. However, the lack of data on Islamic financial institutions operating in the countries examined makes it impossible to determine the extent of their contribution to the economies of these countries. Originality/Value — The studies that have dealt with this topic have been limited to the relationship between finance and the components of inclusive growth. Others have chosen the quality of economic growth as the variable for inclusive growth. However, this study goes beyond that by showing the influence of Islamic finance on an index of inclusive growth that takes into account eight components. This adds value to the existing literature.

Effect of public health expenditure on maternal mortality ratio in the West African Economic and Monetary Union

IntroductionMaternal mortality in West African Economic and Monetary Union countries (WAEMU) is the highest compared with other regions in the world. The majority of health care sources in WAEMU are private and largely involve out-of-pocket expenditures, which may prevent healthcare access. Maternal mortality is an important indicator of the level of attention given to mothers before, during and after childbirth and thus of a system’s overall coherence and capacity for anticipation. Therefore, the objective of this study is to analyze the effects of public health expenditure on maternal mortality in WAEMU.MethodsThe study used panel data from the World Bank Development Indicators (WDI) from 1996 to 2018 covering 7 countries in the West African Economic and Monetary Union. The two-step least squares (2SLS) on health demand function was used to test the effect of public health expenditure on maternal mortality.ResultsPublic health care spending showed a significant negative association with maternal mortality. However, private health expenditure was positively associated with maternal mortality.ConclusionPublic health care expenditure remains a crucial component of reducing maternal mortality. In this region, the authorities need to increase public health spending to build more health centers and improve the equipment of existing infrastructures. Additionally, it is important to reduce the financial barriers for pregnant women. To this end, the operationalization of universal health insurance could help reduce these financial barriers by reducing direct household payments.

Analysis of Factors Impacting the Negativity of the net Result of Primary Banks of the West African Economic and Monetary Union (Waemu)

This study aims to analyse the explanatory factors of the negativity of the net result of primary banks in the West African Economic and Monetary Union (WAEMU). We collected data from the World Bank (WB) and the Central Bank of West African States (BCEAO). The data collected are annual data from 2003 to 2019 and concern all eight WAEMU countries. The analysis tools used were EXCEL and STATA 15 software. The estimation results showed that the increase in the cost of risk (CR) and the increase in general operating expenses (GOE) have a negative sign on the negative net result. Therefore, these two variables (CR and FGE) significantly positively affect the opposing net result. However, the increase in interest and similar income (IPA) has a positive sign, which leads us to say that this factor has a significant adverse effect on the opposing net result. To improve the negative net result, operational recommendations were made to primary banks in the WAEMU based on the results of our analysis.

Institutional quality and green economic growth in West African economic and monetary union

PurposeThis study examined the how institutions influence green economic growth in the West African Economic and Monetary Union (WAEMU) countries with view to contributing to Sustainable development goal of good health and well-being (SDG 3), clean water and sanitation (SDG 6), decent work and economic growth (SDG 8), sustainable cities and communities (SDG11), responsible consumption and production (SDG12). MethodologyThe study made use of data sourced from the Development Indicators (WDI) and Governance Indicators (WGI) from 2002 to 2017 covering the eight (08) WAEMU countries. The study applied the Fully Modified Ordinary Least Squares (FMOLS), which is robust to the heterogeneity and endogeneity presence, to estimate the long-run parameters of the institutional quality effect on green economic growth. FindingsFindings obtained from the study show that the institution's quality influence differs across the countries of study. The findings implication is that institutional quality enhances green economic growth. In specific terms, institutions level enhances green economic growth in counties such as Cote d’Ivoire, Mali, Niger, Senegal, and Togo. On the contrary, it however, deteriorates green economic growth in other countries such as Benin and Burkina Faso. ConclusionAgainst this finding, the study recommends that there is the need for WAEMU countries to consider the improvement of institutional framework, making sure that a robust institutional mechanism such as elimination of corruption, improve government effectiveness, strong credibility of government commitments and policies, an efficient judiciary, sound policies and regulations to reach the green economic growth desired level. ImplicationThe findings implication is that good institutional framework such as good governance, control of corruption, political stability and absence of violence among others, are essential factors in promoting green economic growth. The findings highlight the importance of investment in renewable energy and sustainable agriculture as key drivers of green economic growth in the region. These findings have important implications for policymakers in the WAEMU region, as they provide evidence-based insights into the role of institutional quality in promoting sustainable and inclusive economic growth. OriginalityThe study extends the frontiers of knowledge on green economic growth by using green economic growth a new established indicator that makes use of economic and environmental indices to ensure accurate and assessable economic prosperity.

Can national productions replace imports in West African countries? Estimation of the Marshall–Lerner–Robinson condition (MLRC)

PurposeThis article examines if the national productions of West African Economic and Monetary Union (WAEMU) countries can be substituted for the imports by testing MLRC in these countries.Design/methodology/approachThe Mundell–Fleming model (MMF) is the analytical framework adopted in this paper with import demand and export supply functions estimation borrowed to Thirlwall (1979). This study covers four countries in West Africa from 1990 to 2021. The estimation procedure used is an Autoregressive Distributed Lag (ARDL) approach to cointegration.FindingsThe findings reveal that there is a strong marginal propensity to import in the WAEMU countries. The hypothesis of a non-significant price effect on imports in the short-term is confirmed for several countries while only Togo satisfies the MLRC in the short and long run.Originality/valueThis study presents several originalities: (1) it evaluates MLRC with a clear analytical framework; (2) unlike other studies, this article quantifies the MLRC from a theoretical, econometric and empirical point of view; (3) this article presents the results country by country in order to reveal heterogeneity between countries; (4) this study adds to the Marshall–Lerner condition for the derivation of Robinson by considering a situation where initially the trade balance is not in equilibrium.

Effects of financial inclusion on tax revenue mobilization: Evidence from WAEMU countries

AbstractFinancial inclusion remains at the heart of governments concerns. By creating favorable conditions for access to a diversified range of adapted financial products and services at affordable costs for the populations, financial inclusion generates important opportunities that could lead to increased tax revenue mobilization. This paper analyzes the effects of financial inclusion on tax revenue mobilization, using panel data from West African Economic and Monetary Union (WAEMU) countries over the period 2006–2019. The findings suggest that financial inclusion positively and significantly influences government's tax revenue. Moreover, by looking at the effects of disaggregated financial inclusion dimensions (access, use, and affordability) on various components of tax revenue, we find that the estimated coefficients on the subcomponents of financial inclusion are statistically significant. Results also indicate that the magnitude of effect of financial inclusion is higher on indirect taxes compared to direct tax revenues. This research recommends that policy‐makers should prioritize financial inclusion in their policies and development agenda through National Financial Inclusion Strategies (NFIS) because it can increase countries' resource mobilization and help them to build fiscal resilience.

Free Trade and Tax Efficiency in the West African Economic and Monetary Union: what can we learn for the AFCFTA?

The aim of this paper is to examine the effect of free trade on the tax efficiency of West African Economic and Monetary Union (WAEMU) countries. Specifically, the objective is, on the one hand, to determine the tax efficiency levels of the various taxes, and, on the other hand, to determine the influence of the common external tariff and trade openness on the tax efficiency of the various taxes in WAEMU countries. Using panel data over the period from 1980 to 2019, a stochastic tax frontier model is estimated to determine tax efficiency scores. A censored Tobit model is then used to assess the effect of free trade on the tax efficiency of countries. The results show respective average tax efficiency scores of 75.494%; 3.355%; 69.312% and 60.336% for total tax, direct tax, indirect tax and tax on foreign trade in WAEMU. In addition, the common external tariff and trade openness positively influence the tax efficiency of countries. However, the interaction between free trade and structural transformation, the quality of tax administration and income inequality reduce the tax efficiency of taxes. Decision-makers need to urgently take into consideration the structural transformation of economies, and the improvement of the efficiency of tax administrations in order to benefit from the application of the AfCFTA.

Public investment efficiency in WAEMU zone: do financing sources matter?

PurposeThis paper aims to assess the efficiency of public investment in West African Economic and Monetary Union (WAEMU) countries at both the global and sectoral level over the 2005–2015 period.Design/methodology/approachThis paper estimates efficiency scores using stochastic frontier analysis (SFA) models. Efficiency is divided into managerial efficiency (related to inputs management) and technological efficiency (related to production technology). A Tobit model is then used to investigate the determinants of public investment efficiency.FindingsThe findings suggest that, at the global level, WAEMU countries are less efficient than sub-Saharan African and Asian reference countries. However, the breakdown of global efficiency into managerial and technological reveals that WAEMU countries are more efficient than sub-Saharan African countries in terms of technological efficiency. Moreover, these findings are robust to nonparametric estimation. The assessment of financing sources indicates that external debt has a more positive and significant effect on public investment efficiency than internal debt does.Originality/valueThis paper is unique in that it disentangles managerial efficiency from the technological efficiency of public investment in WEAMU countries and highlights how financing sources of investment affect its efficiency. In terms of policy implications, the underlying message of the results is that the rules and conditions of domestic or regional debt in the WAEMU countries must be strengthened to ensure better monitoring and then better efficiency of these resources.

Household level of air pollution and its impact on the occurrence of Acute Respiratory Illness among children under five: secondary analysis of Demographic and Health Survey in West Africa

BackgroundOne out of ten deaths of children under five are attributable to indoor air pollution. And Acute Respiratory Illness (ARI) is among the direct causes.ObjectiveThis study showed the possibilities of characterizing indoor air pollution in West African Economic and Monetary Union (WAEMU) area and it also made it possible to estimate its impact on the occurrence of ARI in children under five.MethodsIt has been a secondary analysis based on Demographic and Health Surveys (DHSs) from WAEMU countries’ data.. “Household level of air pollution” is the created composite variable, from questions on the degradation factors of indoor air quality (domestic combustion processes) which served to characterize indoor air pollution and to measure its impact by a logistic regression.ResultsBurkina Faso stands out with a greater number of households with a high level of pollution (63.7%) followed by Benin (43.7%) then Togo (43.0%). The main exposure factor "Household level of air pollution" was associated with ARI symptoms (Togo: prevalence = 51.3%; chi-squared test’s p-value < 0.001). Exposure to high level of pollution constitutes a risk (AOR [95 CI]), even though it is not significant ( Ivory Coast: 1.29 [0.72–2.30], Senegal: 1.39 [0.94–2.05] and Togo: 1.15 [0.67–1.95]) and this could be explained by the high infectious etiology of the ARI.

Electricity Consumption and Economic Growth in WAEMU Countries: an Empirical Analysis using Panel Data

Abstract This paper analyzes the relationship between electricity consumption and economic growth, as well as the determinants of this relationship, in the countries of the West African Economic and Monetary Union (WAEMU) over the period from 1990 to 2018. The results obtained from the Autoregressive Lagged Model (ARDL) show that, in the long run, economic growth, the degree of international openness, and gross fixed capital formation explain electricity consumption. In the short run, no variable affects this consumption. Furthermore, in the country-by-country model, the results indicate differentiated effects. They show, in the long and short term, the absence of the effects of economic growth on electrical energy consumption.

Labour Productivity and Economic Growth in the WAEMU Region: Both a Puzzle and a Key to Economic Development?

This article empirically investigated the causal relationship between labour productivity and economic growth in the West African Economic and Monetary Union (WAEMU) region. Recent panel cointegration and Granger causality techniques were adopted to analyse this relationship for the period 1994 to 2018. For robustness checks, three main Granger causality tests were applied in the context of panel VAR, namely: (a) the standard stacked Granger causality, (b) the Dumitrescu and Hurlin (2012) Granger causality, and (c) the Toda and Yamamoto (1995) augmented VAR approach to Granger causality. Contrary to the previous literature and general beliefs, the study found no evidence (neither in the short-run nor in the long-run) of a causal relationship between labour productivity and economic growth in the WAEMU region. The finding suggested that, as long as one considers labour input a determinant of economic growth, the latter is rather intensive labour-based than efficient labour-based in the case of WAEMU. This puzzling result can be explained by the low structural level of labour productivity stemming from the very high proportion of informal employment in these countries. The finding provided important policy implications for the WAEMU countries notably in terms of improving labour productivity in the informal economy, which appears to be the fundamental key to economic development in these countries.

The revenue efficiency consequences of the announcement of a tax transition reform: The case of WAEMU countries

AbstractDoes the revenue replacement strategy of border taxes with domestic revenue collection (tax transition) increase efficiency in collecting revenues in developing countries? This article attempted to answer the question, by assessing the efficiency consequences of announcing a tax transition reform program in West African Economic and Monetary Union (WAEMU) countries. Through an impact evaluation framework with propensity score matching and synthetic control method, we find that the announcement of this reform in WAEMU countries increases efficiency in mobilizing resources at the community level as compared to their counterfactual. Efficient mobilization of resources increases by 4.3% around the reform agenda and is achieved 3 years following the announcement of the reform in these countries. We also find that the achieved efficiency in mobilizing resources goes hand in hand with an improvement in tax‐oriented Doing Business indicators at the community level, by increasing the contribution rate score of firms by near 22 scales and reducing collection time scores by 4.2 scales as compared to the best Doing Business practices on these indicators. The article also evidenced that the reform is overall working through the tax discipline channel rather than tax morale in these countries. Furthermore, having adopted value added tax (VAT), implemented semi‐autonomous revenue agencies (SARAs) and large taxpayers' units (LTUs) contribute to foster the revenue efficiency effect of the reform in above‐mentioned countries.

Public debt and development sustainability issues in the West African Economic and Monetary Union (WAEMU)

This article analyses the impact of public debt on sustainability as measured by the genuine savings indicator covering the period from 2004 to 2018. The methodology adopted is based on dynamic panel generalized methods of moments (GMM). The results after estimation show a negative and significant contribution of public debt to the WAEMU countries’ development sustainability. However, we note that an improvement in institutional governance, an increase in health expenditures and climate change expenditures contribute significantly to putting these countries on a sustainable development trajectory.

Full Modified Ordinary Least Square Analysis of the Relationship between New Technologies of Information, Financial Development and Growth in WAEMU Zone

This paper aims to study the relationship between financial development, information, and communication technology (ICTs) diffusion and economic growth by examining the effects of interactions between finance and ICT on economic growth. The study covers eight West African Economic and Monetary Union (WAEMU) countries and spans the period from 2000 to 2018. The empirical results, after applying the fully modified ordinary least squares (FMOLS) estimator can be generalized as follows. First, regardless of the financial development indicator used, the empirical results show that financial development negatively influences economic growth in the WAEMU. This counter-intuitive relationship may be related to many phenomena, but there are no clear explanations in the literature yet. Second, ICTs diffusion improves economic growth in the zone. This implies that WAEMU countries should strengthen their ICTs policies and improve the use of new information and communication technologies. Finally, the interaction between ICTs diffusion and financial development is positive and significant in explaining growth. This implies that the economies of the WAEMU region can only benefit from financial development once a level of ICTs development is reached.

Fiscal Policy and Economic Growth in the Countries of the West African Economic and Monetary Union (WAEMU)

This article focuses on the relationship between certain fiscal policy instruments and economic growth in the countries of the West African Economic and Monetary Union (WAEMU), namely Benin, Burkina Faso, Ivory Coast, Mali, Niger, Senegal, and Togo. Our growth model was estimated using the "Generalized Method of Moments (GMM) in a system" dynamic panel over the period 1990-2020. The results obtained show that total public revenue excluding grants, total expenditure, external public debt, the active population, and credits to the economy over GDP positively and significantly influence the GDP growth rate. On the other hand, an inflationary environment and poor quality of the Institutions negatively and significantly affect the rate of GDP growth. By way of economic policy implications, the WAEMU countries should reduce the distortions associated with taxation in order to maintain a fairly substantial level of resources and gradually break away from external forms of financing. Finally, financial development must be promoted so that companies can obtain more loans from banks.

Effects of trade openness and Foreign Direct Investment (FDI) inflows on unemployment in West African Economic and Monetary Union (WAEMU) member countries

The objective of this paper was to measure the effect of trade openness and foreign direct investment inflows (FDI) on unemployment in WAEMU countries. To do so, the Vector Autoregressive (VAR) model in panel was used. The results show that there is a bidirectional causality between FDI and trade openness, FDI and unemployment, and a unidirectional causality of unemployment on trade openness. Furthermore, the robust results show that FDI inflows reduce unemployment and thus promote job creation in WAEMU member countries. In addition, the analysis shows that trade openness and FDI inflows increase youth employment (15–24 years old) and encourage migration from vulnerable jobs to less vulnerable jobs.

Impact of Foreign Direct Investment on International Trade in West African Economic and Monetary Union Countries Using Dynamic Panel

The aim of this paper is to study the impact of foreign direct investment (FDI) on international trade in West African Economic and Monetary Union (WAEMU) countries using the dynamic panel. We also have investigated the effects of other variables on trade flows like financial development, urban population and net imports. Our key finding is that there exists a positive and significant impact of FDI on the international trade of WAEMU countries. Financial development and urban population have positive and statistically significant effects on the international trade of WAEMU countries. The effect of net imports on international trade is positive but not statistically significant.

Regional Stock Exchange Development and Economic Growth in the Countries of the West African Economic and Monetary Union (WAEMU)

This study used panel data covering 27 years to investigate the causality between regional stock exchange development and economic growth in the West African Economic and Monetary Union (WAEMU) countries. We performed a homogeneous Granger non-causality with an autoregressive distributed lag model (ARDL) and Markov-switching analysis, using six indicators for the stock and financial market and six for control. The results showed a close economic relationship between WAEMU countries and causality from the regional stock exchange, which supports the supply leading hypothesis. The causality was confirmed in the short and long run, depending on the variable. The causal relationships that support the demand-driven hypothesis were recorded from the economic growth for four market measurements.

PERFORMANCES COMMERCIALES ET HETEROGENEITE DES PAYS DANS L’UEMOA: UNE ANALYSE EMPIRIQUE A PARTIR DE L’ESTIMATEUR GMM

This paper aims to analyse whether the differences in trade performance between the countries of the West African Economic and Monetary Union (WAEMU) do not compromise their convergence. The empirical analysis is carried out using the GMM estimator and covers all eight WAEMU countries over the period 2011-2016. The results confirm the existence of conditional convergence with a slow speed of convergence. The results also show that a low volume of intra-WAEMU trade compromises their convergence.