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The Banking Sector, the Engine of Inclusive Growth in WAEMU Countries: Decoy or Glimmer?

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Abstract

Sustainable and inclusive growth has been at the heart of countries’ development strategies for several decades. This study aims to analyze the role of the banking sector in inclusive growth in the West African Economic and Monetary Union (WAEMU). We constructed a composite inclusive growth indicator based on four pillars integrating growth, poverty, inequalities, human capabilities, and governance. Using the least square dummy variable corrected (LSDVC) method, we then estimate a relationship linking this indicator to variables characterizing the performance of the banking system and its degree of inclusiveness from 1996 to 2017. The results show that inclusive growth is still weak in the WAEMU but is progressing over the years. The performance of the banking sector and its degree of inclusiveness have improved over the period as well. The results from the LSDVC show that the banking sector’s role in inclusive growth is not a sham. The banking sector’s contribution to inclusive growth in the WAEMU zone involves a drop in lending rates, as well as a drop in cost/income ratios, combined with an increase in the credit granted. Policy recommendations are discussed accordingly.

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  1. Ecole Nationale Supérieure de Statistique et d’Economie Appliquée (ENSEA), Abidjan, Côte d’Ivoire

    Doukouré Charles Fe & Jeffrey Kouton

  2. Cellule d’Analyse des Politiques Economiques du CIRES (CAPEC), Abidjan, Côte d’Ivoire

    Doukouré Charles Fe

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Fe, D.C., Kouton, J. The Banking Sector, the Engine of Inclusive Growth in WAEMU Countries: Decoy or Glimmer?. J Knowl Econ 14, 472–502 (2023). https://doi.org/10.1007/s13132-022-00893-3

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