DOI: 10.36347/sjebm.2022.v09i09.001

Pages: 177-184

As an extension of existing empirical research, the paper shows that despite the structure of a financial sector, the financial sector development moves in opposite directions with inflation. Empirical verification using fixed-effects method from 2000 to 2018 in CEMAC countries provides datum about the theoretical hypothesis that there is negative relationship between inflation and financial sector development. Besides, results show that despite the low level of inflation target in CEMAC, the negative relationship between inflation and financial sector development exit and the credit risk associated to credit supply activity increases inflation in an important proportion. This increase of inflation reduces the performance of the financial sector and delays the central banker actions. The main policy recommendation addressed to monetary and financial policy actors in CEMAC is to improve strategies to contain the spillover effects due to the development financial sector.