What drives bank lending? A closer look at bank lending types in Africa
Date
2022
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
African Journal of Economic and Management Studies
Abstract
Purpose: In this study, the authors present unique evidence on bank lending types by paying particular
attention to the factors that drive the different types of bank lending in Africa using bank-level data.
Design/methodology/approach – In presenting such evidence, the study employs a robust fixed effect
panel data with year and technological controls comprising 57 banks from 29 African economies between 2006 and
and 2015.
Findings: The results show that different factors affect different bank lending types differently in Africa.
Specifically, while the authors find that total or aggregate bank lending is positively driven by bank
capitalization and spread but negatively driven by bank size, corporate and commercial bank lending is
positively driven by bank size, spread, inflation, elections and extent of business disclosure but negatively
driven by bank capitalization, loan loss reserves, operational costs, and gross domestic product per capita.
Moreover, interbank lending is both negatively and positively driven by bank capitalization and size
respectively, while other bank lending type are driven positively by financial crises but negatively by
bank size, inflation and extent of business disclosure. Finally, retail and consumer lending are positively driven
by bank capitalization, loan loss reserves, and spread. while negatively driven by bank size and inflation.
Practical implications: These imply that bank managers, regulators, policymakers and researchers must
begin to see each bank lending category separately and independently since varying factors influence the
different categories of bank lending differently.
Originality/value: The study presents new insights into how different factors determine different lending
types in Africa for the first time, to the best of the authors’ knowledge.
Description
Research Article
Keywords
Banks, Lending, Africa