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Implications of Monetary Policy for Credit and Investment in Sub-Saharan African Countries
| Content Provider | Semantic Scholar |
|---|---|
| Author | Ndikumana, Léonce |
| Copyright Year | 2016 |
| Abstract | This paper investigates the implications of monetary policy for domestic investment through its effects on bank lending to the private sector and interest rates in sub-Saharan African countries. The study argues that the pursuit of inflation control through contractionary monetary policy carries high costs in terms of reduced investment and ultimately slower economic growth. The econometric evidence based on a sample of 37 sub-Saharan African countries over 1980-2012 shows that contractionary monetary policy affects domestic investment negatively both indirectly through the bank lending or quantity channel as well as directly through the interest rate or cost of capital channel. The results suggest that policies that maintain a low interest rate regime would stimulate bank lending to the private sector, which in turn would boost domestic investment. The results have important policy implications for African countries in their efforts to achieve and sustain high growth rates as a means of reaching their national development goals notably employment creation and poverty reduction. |
| Starting Page | 1 |
| Ending Page | 18 |
| Page Count | 18 |
| File Format | PDF HTM / HTML |
| Volume Number | 18 |
| Alternate Webpage(s) | http://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_351-400/WP356.pdf |
| Alternate Webpage(s) | http://www.jadafea.com/wp-content/uploads/2017/01/00_Ndikumana_rev2.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
