Effect of the structure of bank credit on economic growth in WAEMU

Abstract

Purpose This study examines the relationship between the structure of bank credit and gross domestic product (GDP) per capita in West African Economic and Monetary Union (WAEMU) countries over the period 1997–2023. It specifically investigates whether the relationship between bank financing and income levels differs according to the sector receiving credit. Design/methodology/approach The study uses a balanced panel of seven WAEMU countries over 1997–2023. A panel ARDL model is estimated using the Pooled Mean Group (PMG) estimator to distinguish between short-run and long-run relationships. Bank credit structure is measured by the amounts of credit allocated to the primary, secondary and tertiary sectors. Findings The results show that, in the long run, credit allocated to the secondary and tertiary sectors is positively and significantly associated with GDP per capita, while credit allocated to the primary sector is negatively and significantly associated with GDP per capita. In the short run, none of the three sectoral credit coefficients is statistically significant. Research limitations/implications The analysis is limited to WAEMU countries because of data availability and does not establish causal effects. The findings nevertheless suggest that the effectiveness of bank credit depends on sector-specific conditions and should be interpreted alongside broader structural and institutional factors. Practical implications Policies should focus on improving access to and the effectiveness of bank financing across sectors. In particular, strengthening productivity and financing conditions in the primary sector may help improve the contribution of agricultural credit to economic development. Social implications Improving the allocation and effectiveness of bank credit can support income growth and contribute to broader economic development. Particular attention to financing constraints in productive sectors may help strengthen the benefits of financial development for populations dependent on these activities. Originality/value The study contributes to the literature by examining bank credit structure through sector-specific credit amounts rather than aggregate credit indicators. It provides evidence of heterogeneous long-run relationships between sectoral bank financing and GDP per capita in WAEMU countries.

The authors' abstract, as published at the source. African Journal of Economic and Management Studies, 2026 · DOI ↗