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Econometric analysis of bank lending and business cycles in South Africa

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  • Oludele Akinloye Akinboade
  • Daniel Makina

Abstract

This article examines econometric relationships between bank lending and business cycle in South Africa. Two long-run economic relationships are hypothesized between total credit and the variables, namely, coincidental indicators, spread between lending and borrowing rates, money supply, stock price index, inflation and banking sector specific factors included in the model. Of these variables, only coincident indicators, changes in money supply as well as capital, and reserve are found to exert some influence on short-run total credit availability.

Suggested Citation

  • Oludele Akinloye Akinboade & Daniel Makina, 2010. "Econometric analysis of bank lending and business cycles in South Africa," Applied Economics, Taylor & Francis Journals, vol. 42(29), pages 3803-3811.
    • Handle: RePEc:taf:applec:v:42:y:2010:i:29:p:3803-3811
    DOI: 10.1080/00036840802360138
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    References listed on IDEAS

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    1. Jacob A. Bikker, 2004. "Competition and Efficiency in a Unified European Banking Market," Books, Edward Elgar Publishing, number 2830.
    2. Joe Peek & Eric Rosengren, 1995. "Is bank lending important for the transmission of monetary policy? An overview," New England Economic Review, Federal Reserve Bank of Boston, issue Nov, pages 3-11.
    3. Gorton, G. & Khan, J., 1992. "The Design of Bank Loan Contracts, Collateral, and Renegociation," RCER Working Papers 327, University of Rochester - Center for Economic Research (RCER).
    4. Christopher A. Sims, 1998. "Role of interest rate policy in the generation and propagation of business cycles: what has changed since the '30s?," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 42(Jun), pages 121-175.
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    Cited by:

    1. B. Matemilola & A. Bany-Ariffin & W. Azman-Saini, 2012. "Financial Leverage and Shareholder’s Required Returns: Evidence from South Africa Corporate Sector," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 18(3), pages 601-612, March.
    2. Zins, Alexandra & Weill, Laurent, 2018. "Cyclicality of lending in Africa: The influence of bank ownership," Emerging Markets Review, Elsevier, vol. 37(C), pages 164-180.
    3. Coert Erasmus, 2014. "An Empirical Study of Bank Efficiency in South Africa Using the Standard and Alternative Approaches to Data Envelopment Analysis (DEA)," Journal of Economics and Behavioral Studies, AMH International, vol. 6(4), pages 310-317.
    4. Allister Mounsey & D. Tracy Polius, 2015. "Is It Time to Revisit the Savings Rate Floor in the ECCU?," Economic Affairs, Wiley Blackwell, vol. 35(1), pages 75-92, February.
    5. Bolaji Tunde Matemilola & Rubi Ahmad, 2015. "Debt financing and importance of fixed assets and goodwill assets as collateral: dynamic panel evidence," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 16(2), pages 407-421, April.
    6. Serhat Yuksel & Mustafa Ozsari, 2016. "Impact of Consumer Loans on Inflation and Current Account Deficit: A Toda Yamamoto Causality Test for Turkey," World Journal of Applied Economics, WERI-World Economic Research Institute, vol. 2(2), pages 3-14, December.
    7. Eunice Macrean Atieno & Caroline Ayuma & Christine Ngari, 2022. "Effectiveness of Credit Appraisal on management Non-Performing Loans in Kenyan Commercial Banks," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 9(11), pages 40-45, November.
    8. repec:bcp:journl:v:9:y:2022:i:11:p:40-45 is not listed on IDEAS
    9. Romain Houssa & Jolan Mohimont & Christopher Otrok, 2015. "Sources of Business Cycles in a Low Income Country," Pacific Economic Review, Wiley Blackwell, vol. 20(1), pages 125-148, February.
    10. Carlos Pestana Barros & Zorro Mendes, 2016. "Assessing the competition in Angola’s banking industry," Applied Economics, Taylor & Francis Journals, vol. 48(30), pages 2785-2791, June.
    11. Romain Houssa & Jolan Mohimont & Chris Otrok, 2013. "Credit Shocks and Macroeconomic Fluctuations in Emerging Markets," CESifo Working Paper Series 4281, CESifo.

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