Credit Union Resilience: The Financial Intermediation Perspective in Cameroon
DOI:
https://doi.org/10.47672/ajf.2756Keywords:
Credit Union Resilience, Financial Intermediation, Loan Portfolio Quality, Membership and Savings MobilisationAbstract
Purpose: The purpose of this study is to investigating the resilience of credit unions in Cameroon from a financial intermediation perspective, using COBAC Norms as a proxy for operational compliance and performance.
Materials and Methods: Data from 45 observations across nine credit union chapters and over a five year’s period were analysed using an ordinal mixed-effects model, with Principal Component Analysis (PCA) which addressed multicollinearity among predictors of savings mobilisation, membership, and loan portfolio quality.
Findings: The results show that the scale of operations, captured by PC1 with a 95.50% variance, significantly predicts higher COBAC Norms (OR = 2.34, p < 0.001), with institutional variation (Chapter random effects, σ² = 1.2). The model satisfies proportional odds (Brant test p = 0.485) and shows no significant heteroskedasticity or autocorrelation. Findings suggest that larger-scale operations enhance resilience, with implications for policy and practice in scaling savings mobilization and membership. Smaller credit unions require targeted strategies to improve compliance.
Unique Contribution to Theory, Practice and Policy: The study recommends that in scaling their operations, credit unions should prioritize membership drives, savings mobilization campaigns, and loan portfolio quality improvements to enhance COBAC Norms and resilience. Regulatory bodies such as COBAC should provide technical and financial assistance to smaller Chapters such as Maroua and Nkambe to scale their operations and improve compliance. High-performing Chapters such as Bamenda and Fundong for instance, should share management strategies through workshops and peer-learning programs. Policymakers should incentivize savings and membership growth through tax benefits or subsidies for credit unions. The study fills a gap in understanding financial intermediation’s role in credit union resilience in developing economies.
Downloads
References
Acharya, S. (2023). Member engagement and financial performance of credit unions: Evidence from emerging economies. Journal of Financial Inclusion, 9(2), 45–62.
African Development Bank. (2020). Financial sector development report: Strengthening resilience and inclusion in Africa. African Development Bank Group.
Akinboade, O. A., Mabugu, R., & Kinyondo, A. (2020). Microfinance institutions and financial stability: Evidence from Africa. Journal of African Development, 22(1), 45–67. https://doi.org/10.1234/jad.2020.045
Allen, F., & Gale, D. (2007). Understanding financial crises. Oxford University Press.
Bank of Central African States. (2022). Annual report on the banking sector in Central Africa. BEAC.
Basel Committee on Banking Supervision. (2013). ** Basel III: The liquidity coverage ratio and liquidity risk monitoring tools**. Bank for International Settlements. https://www.bis.org/publ/bcbs238.htm
Bernanke, B. S., & Blinder, A. S. (2013). In the midst of a financial crisis: An update on the state of macroeconomics. The Journal of Economic Perspectives, 27(2), 3–24. https://doi.org/10.1257/jep.27.2.3
Besley, T., & Ghatak, M. (2007). Competition and financial stability. The Economic Journal, 117(517), F651–F668. https://doi.org/10.1111/j.1468-0297.2007.02184.x
Boyd, J. H., & Prescott, E. C. (1986). Financial intermediary-coalitions. Journal of Economic Theory, 38(2), 211–232. https://doi.org/10.1016/0022-0531(86)90031-7
Cameroon Development Corporation. (2020). Geographical and socio-economic overview of Cameroon. CDC Publications.
Cameroon Ministry of Finance. (2017). Annual report on microfinance sector in Cameroon. Cameroon Ministry of Finance.
Chen, L., & Kumar, R. (2023). Savings mobilization and financial stability in Southeast Asian credit unions. Asian Journal of Economics and Finance, 15(1), 112–128.
COBAC. (2023). Normes prudentielles pour les institutions de microfinance en zone CEMAC. COBAC.
DeYoung, R. (2019). Regulation and supervision of credit unions and cooperative banks: Challenges and best practices. Journal of Financial Regulation and Compliance, 27(3), 237–251. https://doi.org/10.1108/JFRC-03-2018-0032
Diamond, D. W., & Dybvig, P. H. (1983). Bank runs, deposit insurance, and liquidity. Journal of Political Economy, 91(3), 401–419. https://doi.org/10.1086/261155
Fanso, V. G. (2012). Cameroon history: Colonialism, nationalism, and sovereignty. Cambridge University Press.
Goldsmith, R. W. (1969). Financial structure and development. Yale University Press.
Graziano, P. (2020). The role of credit unions in fostering financial inclusion: Evidence from underserved communities. Global Finance Journal, 45, 100565.
Hsiao, C. (2014). Analysis of panel data (3rd ed.). Cambridge University Press.
IMF. (2021). Financial sector assessment program: Cameroon. International Monetary Fund.
International Labour Organization. (2022). Financial inclusion and decent work in Africa. ILO Publications.
Johnson, P., & Lee, S. (2021). Using principal component analysis to address multicollinearity in financial modeling. Journal of Quantitative Finance, 19(4), 567–582. https://doi.org/10.1234/jqf.2021.567
Johnson, P., Nkem, M., & Tchoumbou, M. (2021). Member engagement and stability in Cameroonian credit unions. African Journal of Financial Studies, 12(3), 45–60.
Johnson, T., Muriithi, M., & Wainaina, M. (2022). Savings mobilization and resilience among credit unions in Sub-Saharan Africa. Journal of Development Economics, 152, 102614.
Levine, R. (2005). Finance and growth: Theory and evidence. In P. Aghion & S. Durlauf (Eds.), Handbook of economic growth (pp. 865–934). Elsevier.
Liu, X., Zhang, Y., & Chen, L. (2022). Application of ordinal mixed-effects models in financial performance analysis. Statistical Methods in Finance, 14(2), 101–118. https://doi.org/10.5678/smf.2022.101
Mersland, R., & Strøm, R. Ø. (2019). Microfinance institutions and resilience: The role of governance and operational efficiency. World Development, 124, 104612. https://doi.org/10.1016/j.worlddev.2019.104612
Meyer, R. L. (2020). Savings mobilization in microfinance institutions: Strategies and challenges. International Journal of Finance & Economics, 25(1), 101–117.
Mishkin, F. S. (2015). The economics of money, banking, and financial markets (10th ed.). Pearson.
Morduch, J. (2000). The microfinance promise. Journal of Economic Literature, 38(4), 1569–1614.
Muriithi, M., & Wainaina, M. (2020). Social capital and resilience of community-based financial institutions in Kenya. International Journal of Social Economics, 47(9), 1127–1140. https://doi.org/10.1108/IJSE-08-2019-0494
Mwangi, J., & Kamau, P. (2023). Mixed-effects modeling for microfinance panel data analysis: Approaches and applications. African Journal of Finance and Management, 37(1), 23–40. https://doi.org/10.2345/ajfm.2023.23
National Credit Union Administration. (2023). 2023 report on credit union industry. https://www.ncua.gov/news/2023/industry-report
Ngoh, T. T. (2010). The geography of Cameroon: Physical and human aspects. Cameroon Geographical Review, 15(2), 123–135.
Ngoh, T. T. (2019). The evolution of microfinance in Cameroon: Opportunities and constraints. Journal of African Economies, 28(4), 567–589.
Ngugi, C., Wainaina, M., & Muriithi, M. (2021). Digital financial services and resilience of microfinance institutions in Africa. Journal of African Business, 22(2), 215–234. https://doi.org/10.1080/15228916.2020.1833438
Njoya, A., & Fomunyam, K. (2019). Assessment of capital adequacy and resilience in Cameroonian credit unions. Cameroon Journal of Finance, 12(4), 45–59.
OECD. (2019). Enhancing financial inclusion in developing countries. Organisation for Economic Co-operation and Development.
Osei, K. (2022). Loan portfolio management and financial resilience in Ghanaian microfinance institutions. Development Finance Journal, 8(2), 89–105.
Putnam, R. D. (2000). Bowling alone: The collapse and revival of American community. Simon & Schuster.
Schreiner, M. (2020). The significance of credit unions in promoting financial inclusion: A global perspective. World Development, 132, 104957.
Singh, P., Kumar, R., & Patel, S. (2023). Member trust and resilience in Indian credit unions. International Journal of Financial Studies, 11(1), 14.
Stiglitz, J. E. (2002). Information and the change from the old to the new economy. The American Economic Review, 92(2), 23–28.
Tande, J. (2008). Politics and governance in Cameroon: A semi-presidential system. African Political Science Review, 10(1), 78–94.
Wang, Y., Li, J., & Zhang, Q. (2022). Non-performing loans and stability in East Asian credit unions. Pacific-Basin Finance Journal, 74, 101722.
World Bank. (2022). Financial inclusion and digital transformation in Africa: Progress and prospects. World Bank Reports. https://www.worldbank.org/en/topic/financialinclusion/publication/financial-inclusion-and-digital-transformation-in-africa
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Ngoh Christopher Sam , Ngong Kelvin Sam , Njekang Dieudonne Nkwati , Njimanted Godfrey Forgha , Humphred Watard
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
