Abstract

This study examines the effect of the spatial dependence of the number of bank branches on the supply of credit in West African Economic and Monetary Union (WAEMU) countries, over the period 1995-2021. Methodologically, we mobilize spatial econometric techniques to take into account the spatial interdependence between the various countries involved in the analysis. Results from the SDM (Spatial Durbin Spatial) model reveal that the number of bank branches has a positive and significant influence on credit supply. In addition, bank size has a positive effect on credit supply. Nevertheless, inflation hurts the credit supply. Considering spatial effects has also shown us that the supply of credit from one country to another also depends on the volume of credit it receives from other countries. In terms of economic policy implications, banks in the zone need to promote the strategy of geographic expansion of their bank branches. Similarly, monetary authorities need to make efforts to keep inflation rates at moderate, stable levels, and encourage the emergence of large banks.

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