Monetary policy, prudential regulations and bank lending behaviour in Africa

Abstract

The study examines the effect of monetary policy and prudential regulations on bank lending behaviour in Africa. This study employs the Two-Stage Least Square (2SLS) estimation technique for a panel dataset of 54 African countries over the period, 2004–2021. The study finds that monetary policy and prudential regulations reduce bank lending and the impact is better in countries with a strong institutional environment. It provides evidence to affirm that monetary policy and prudential regulations provide a complementarity effect in yielding a desirable outcome for bank lending.