The Effect of Financial Integration on Financial Performance of Commercial Banks in CEMAC Zone

Abstract ―​

This paper aims to examine the effect of financial integration on financial performance of commercial banks in CEMAC zone. In order to achieve this objective, we use a methodological approach based on panel data ranging from 2000 – 2021 in six (6) CEMAC zone countries. This study used panel data multiple regression model to ascertain this objective by making comparison among three models, panels corrected standard errors (PCSEs) model, fixed effect model, and random effect model while estimating econometric models. The result pertains to the panels corrected standard errors (PCSEs) regression. The analysis demonstrated that financial integration, does positively affect commercial banks performance in terms of bank deposits and ROA but the findings on ROA was insignificant. This outcome can be attributed to the fact that financial integration facilitates cross-border capital flows and enhances access to a broader range of financial products and services. These factors collectively boost public confidence in the banking sector, leading to increased deposits. To significantly boost the influence of financial integration on the financial performance of commercial banks in the CEMAC zone, targeted policy actions and strategic investments are required. Banks should work on deepening regional integration by actively participating in the CEMAC’s financial infrastructure projects, such as the establishment of a regional payments system that can facilitate smoother and more efficient cross-border transactions.