Monetary Policy Transmission to Household Credit: Evidence from Uganda’s Credit Registry Data

Marina Conesa Martinez, Elizabeth Kasekende, Nan Li, Adam Mugume, Samuel Musoke, Cedric Okou and Andrea Presbitero

No 2025/242, IMF Working Papers from International Monetary Fund

Abstract: This paper examines the effectiveness of monetary policy transmission in developing countries using loan-level data from Uganda’s credit registry. We analyze more than 632,000 household loans issued by all commercial banks between 2017 and 2023, a period marked by significant policy rate fluctuations. We find that household credit, which accounts for over 50 percent of new loan accounts, responds to monetary policy: rate hikes are followed by higher lending rates and reduced loan size and maturity. Controlling for credit demand with time-varying borrower-group fixed effects, we find stronger transmission among banks with lower liquidity and capital, and those holding more government securities. The effects are more pronounced for fixed-rate loans than for floating-rate loans. In general, our results support the presence of a bank lending channel in Uganda, similar to what is observed in more advanced economies.

Keywords: Monetary Policy Transmission; Credit Registry; Bank Lending Channel; Bank Credit; Developing Countries; IMF working papers; rate hike; loan rate; bank characteristic; Loans; Credit; Consumer credit; Central bank policy rate (search for similar items in EconPapers)
Pages: 37
Date: 2025-11-14
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