Monetary Policy and the Banking Sector in South Africa

De Jager, P., Matousek, R., Mullineux, A. and Solomon, H. 2017. Monetary Policy and the Banking Sector in South Africa. Centre for the Study of African Economies (CSAE) Conference 2017: Economic Development in Africa. Oxford, UK 19 - 21 Mar 2017

TitleMonetary Policy and the Banking Sector in South Africa
AuthorsDe Jager, P., Matousek, R., Mullineux, A. and Solomon, H.
TypeConference paper
Abstract

Our paper compares the reaction of different types of loans vs aggregate loans to monetary policy through the bank lending channel (BLC) within the South African banking sector. Using post-apartheid data, we find evidence of the BLC when using aggregate loan supply. that smaller and less capitalised and less efficient banks respectively reduce the supply of loans under contractionary. Furthermore, the former are also slower to adjust the supply of loans during periods of monetary easing. Our findings using disaggregated loan data show that the supply of mortgage loans is more sensitive than the supply of private loans to changes in monetary policy. On the other hand, the supply of credit card loans and the supply of public loans is less sensitive to the BLC. Our findings expose a weakness in the BLC in that sensitivity of bank loans to monetary policy depending on its funding sources.

KeywordsBank Lending Channel, Efficiency, Panel Data, South Africa
Year2017
ConferenceCentre for the Study of African Economies (CSAE) Conference 2017: Economic Development in Africa
Web address (URL) of conference proceedingshttps://editorialexpress.com/conference/CSAE2017/program/CSAE2017.html

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