Drivers of corporate credit in South Africa

Kathryn Bankart, Xolani Sibande and Konstantin Makrelov

No 11047, Occasional Bulletin of Economic Notes from South African Reserve Bank

Abstract: Corporate credit growth remains strong despite tighter monetary policy and deteriorating global and domestic conditions. Current drivers of corporate credit, particularly general loans and advances, are normalising to pre-COVID levels as the need for working capital has increased, investment has picked up in particular sectors of the economy such as agriculture and passthrough from monetary policy actions has been limited. A simple econometric model suggests that investment is a major driver of corporate credit growth in the long-run, while lending spreads and government borrowing rates are important determinants in the short-run.

Date: 2023-06-29
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