This paper investigates the relationship between equity capital and the default risk of a panel of 11 Beninese banks over the period 2004-2015. Using Roy's (1952) "Zscore" risk indicator, we highlight a negative relationship between equity capital and the probability of failure of Beninese banks through an econometric analysis based on the Generalized Method of Moments (GMM). Given the dynamics of the banking sector and the diversity of risks, it would appear necessary and imminent to re-examine and update the current prudential framework by incorporating new provisions.
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