Bank Excess Liquidity and Economic Growth in Waemu Countries: A Panel Data Approach

Abstract

This paper provides an empirical assessment of the relationship between banking, liquidity, investment, terms of trade, bank solvency ratio, financial development and economic growth in the WAEMU zone. The analysis focuses on 7 countries of the West African Economic and Monetary Union (WAEMU) and covers the period 1994-2015. Using the panel data approach, we show that economic growth is positively related with banking on liquidity. In addition, the results highlight the impact of bank liquidity on economic growth but mitigate when it is associated with the investment.