DOLLARS AND DECISIONS: ANALYZING THE IMPACT OF BANK-BASED AND MARKET-BASED FINANCE ON ECONOMIC GROWTH IN CAMEROON

Authors: Amina Fatima Mbah, Ibrahim Aliou

Published: March 2024

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Abstract

<p>Amidst the challenges confronting Cameroon's pursuit of its 2020 objectives outlined in the Development Strategy for Competitiveness and Employment (DSCE), a critical inquiry emerges—do banks and market finance operate in tandem or do they engage in competition within the Cameroonian economic landscape? Despite efforts, the nation fell short of its targeted 5.5% average growth rate during 2010-2020, settling for a modest increase from the 3% under the Poverty Reduction Strategy Paper (PRSP). This deviation prompts a reassessment of the factors contributing to this underperformance, with suspicions cast upon the impact of declining oil prices and security shocks in various regions of the country, including the far north, east, north-west, and south-west. Contrary to the prevalent attributions, this paper posits that the underwhelming economic performance in Cameroon is primarily rooted in shortcomings within the financial system. The research scrutinizes the dynamics between banks and market finance, delving into whether they complement each other or function in competitive isolation. By centering the discussion on the financial sector, this paper aims to provide a nuanced perspective on the impediments to achieving the DSCE's growth targets. This abstract underscores the significance of recognizing the interplay between different financial entities and mechanisms in fostering economic growth. While external factors like oil prices and security challenges cannot be dismissed, the focus on financial systems provides a fresh lens through which to analyze and address the performance gaps. The alignment or discord between banks and market finance emerges as a crucial factor in understanding the intricacies of Cameroon's economic landscape. In conclusion, this abstract posits that the underperformance of Cameroon vis-à-vis its growth targets can be attributed to internal factors within the financial system, specifically the relationship between banks and market finance. By shedding light on this aspect, the paper contributes to a comprehensive understanding of the challenges and opportunities in steering the Cameroonian economy towards sustained and robust growth</p>

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