article · International Journal of Social and Administrative Sciences
An analysis of institutional governance and banking stability across the CEMAC region from 2002 to 2022 explores the specific effects of corruption control and the rule of law on non-performing loans. Utilizing econometric panel data techniques designed to address cross-sectional dependence, the investigation assesses how key governance indicators correlate with loan defaults. The findings demonstrate that better control of corruption significantly reduces non-performing loans within the region. Conversely, the rule of law does not show a direct, statistically significant effect on the level of bad loans. Consequently, regional strategies aimed at mitigating bad debt in the financial sector require targeted initiatives that strengthen anti-corruption measures, enhance operational transparency, and improve accountability across institutions.
High levels of non-performing loans threaten the stability of banking sectors and constrain economic growth. Identifying that anti-corruption measures have a direct impact on reducing bad debts allows financial regulators and regional authorities to direct resources where they are most effective, rather than relying solely on broader legal reforms.
The abstract does not indicate an application pathway for commercialisation, as it focuses on macroeconomic panel data and policy recommendations for regional governance rather than a commercial product or service.
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This study examines how the quality of institutional governance, specifically the control of corruption and the rule of law, influences non-performing loans (NPLs) in the CEMAC region. Using a secondary panel data set of the CEMAC countries from 2002 to 2022, the study employs panel data analysis and estimation techniques, including Panel Corrected Standard Error (PCSE), the Feasible Generalized Least Squares (FGLS), and the Driscoll-Kraay Standard Errors (DKSE), to overcome the challenge of cross-sectional dependence that exists in the panel data. The results reveal that the control of corruption has a highly significant negative impact on NPLs, meaning that improved control of corruption leads to a decrease in NPLs. In contrast, the rule of law does not exhibit a direct significant effect on non-performing loans, suggesting that while the rule of law remains an essential component of strong institutional governance, its direct influence on NPLs may not be as pronounced as that of corruption control. Based on these findings, the authors recommend that policymakers at the regional level within CEMAC should focus their efforts on implementing deep anti-corruption measures and fostering a culture of transparency and accountability to effectively curb the rise in non-performing loans.
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DOI: 10.55493/5051.v10i1.5489
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