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Bank-Lending Channel in South Africa: Bank-Level Dynamic Panel Date Analysis

Moses Sichei ()
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Moses Sichei: Department of Economics, University of Pretoria

No 200510, Working Papers from University of Pretoria, Department of Economics

Abstract: The paper investigates the bank-lending channel (BLC) of monetary policy in South Africa using quarterly bank-level data for the period 2000Q1-2004Q4. Capital adequacy and bank size are used as indicators for information problems faced by banks when they look for external finance. Utilising dynamic panel estimation methods the study shows that BLC operates in South Africa. The finding has some policy implications. First, there is need to coordinate monetary policy with financial innovations and prudential banking regulations. Second, the overall effects of monetary policy pursued by the South African Reserve Bank cannot be completely characterised by interest rates only.

Keywords: Monetary policy transmission; Bank-lending channel; Dynamic panel; GMM estimator (search for similar items in EconPapers)
JEL-codes: E5 E52 G21 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2005-11
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