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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Bank lending and business cycles: South African evidence
Authors:Akinboade, Oludele AkinloyeISNI
Makina, Daniel
Year:2009
Periodical:African Development Review (ISSN 1467-8268)
Volume:21
Issue:3
Pages:476-498
Language:English
Geographic term:South Africa
Subjects:banks
loans
business cycles
External link:https://onlinelibrary.wiley.com/doi/10.1111/j.1467-8268.2009.00219.x/pdf
Abstract:The paper provides empirical analysis on the linkage between the behaviour of bank lending and business cycles in South Africa. Consistent with theory, overall evidence suggesting pro-cyclicality of bank lending is uncovered both at macro and micro levels. At macro level, bank lending and lending rates have moved in tandem with business cycles. Real borrowing by government was counter-cyclical to business cycles as would be expected if the role of government was to fine-tune the economy during booms and recessions. At micro level, bank lending to households and firms was generally pro-cyclical. Even the growth of provisioning by banks has been largely pro-cyclical to business cycles, though exceptions were recorded. First, new mortgage lending exhibited counter-cyclical behaviour before 1993. This behaviour is attributed to the political and economic climate prevailing then, which created uncertainties that made ownership of property a good hedge against economic and political risks. Secondly, the growth of real credit for investment and of foreign trade finance does not appear to have been related to business cycles. App., bibliogr., note, sum. [Journal abstract]
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