Monetary policy and bank lending in developing countries: Loan applications, rates, and real effects

Charles Abuka, Ronnie K. Alinda, Camelia Minoiu, Jose-Luis Peydro and Andrea Presbitero

Journal of Development Economics, 2019, vol. 139, issue C, 185-202

Abstract: Recent studies of monetary policy in developing countries document a weak bank lending channel based on aggregate data. In this paper, we bring new evidence using Uganda's supervisory credit register, with microdata on loan applications, volumes and rates, coupled with unanticipated variation in monetary policy. We show that a monetary contraction reduces bank credit supply—increasing loan application rejections and tightening loan volume and rates—especially for banks with more leverage and sovereign debt exposure. There are associated spillovers on inflation and economic activity—including construction permits and trade—and even social unrest.

Keywords: Bank lending channel of monetary policy; Bank credit; Real effects; Credit register; Developing countries (search for similar items in EconPapers)
JEL-codes: E42 E44 E52 E58 G21 G28 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (47)

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Related works:
Journal Article: Monetary Policy and Bank Lending in Developing Countries: Loan Applications, Rates, and Real Effects (2019)
Working Paper: Monetary policy and bank lending in developing countries: loan applications, rates, and real effects (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:139:y:2019:i:c:p:185-202

DOI: 10.1016/j.jdeveco.2019.03.004

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