Bankruptcy, financial liberalization, and efficiency of commercial banks in Cameroon

The effects of financial liberalization policy on banking efficiency are backed up neither by theoretical studies nor by empirical studies. The main objective of this study is to analyze the evolution of productivity of Cameroonian commercial banks, following the implementation of the recent financial liberalization measures. For this purpose, we use the DEA (Data Envelopment Analysis) method to measure the evolution of efficiency, and The Malmquist Index to measure and decompose the total factor productivity. The results show that the effects of financial liberalization are mixed because many transmission channels were either insensitive; or they evolved in an unexpected direction due to a decline in loans to the economy. We recommend that institutional measures be taken, so as to improve the business environment and enable banks to overcome difficulties in having reliable accounting and financial information on loan applicants.