How Do Business and Credit Cycles Interact in EMCCA Countries?

This article analyzes potential interactions between cyclic fluctuations in credit and activity in countries of the Economic and Monetary Community of Central Africa (EMCCA). Cycles are extracted by using a pass-band filter, then characterized over the period 1960-2008 according to the Bry and Boshan algorithm. Co-movements and concordance analysis establish that credit is procyclical in the EMCCA countries. Cointegration and causality tests specify interactions between the both cycles within countries. Indeed, in Chad credit cycle causes activity cycle; in Gabon and Congo, a feedback effect is observed; in Cameroon and CAR causality seems less obvious. Finally, results reveal specificities in banks behavior towards the financing of activity in EMCCA area.