Abuka, Charles Alinda, Ronnie K. Minoiu, Camelia Peydró, José-Luis Presbitero, Andrea F.
Year of Publication:
[Journal:] Journal of Development Economics [Volume:] 139 [Year:] 2019 [Pages:] 185-202 [ISSN:] 0304-3878
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.
Bank lending channel of monetary policy bank credit real effects credit register Developing countries