Does Saving Mobilization Enhance Credit Granting? An Evidence from Cameroon Rural Areas

Herve Tchokomeni, Raissa Estelle Kapche, Sabine Aude Nanfak

Abstract: Join effects of economic isolation and difficulties of managing credit risk slow down the expansion of banks in rural areas. Financial structures that are deployed there are rural microfinance institutions that collect local savings and finance economic activity. The goal of this paper is to highlight the impact of savings mobilization on credit granting in rural areas. Based on data collected by the World Council of Credit Unions (WOCCU) from 2007 to 2018, and covering ten microfinance institutions involved in rural financing, the specifications of the Generalized Moment Methods (GMM) applied to unbalanced panel data show that increase in savings has a very weak impact on credit granting in rural areas. It calls National Monetary Authorities and the Central Bank to support the credit granting mechanisms in order to interest commercial banks.

Keywords: Bank credit; Microfinance; Unbalanced Panel; Rural areas; Savings Mobilization