Namibia Business School (NBS)

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Browsing Namibia Business School (NBS) by Subject "Bank-lending channel"

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    Investigating the transmission of monetary policy through the bank lending channel in Namibia
    (University of Namibia, 2021) Mushelenga, Johannes Peyavali; Kuruba, Gangappa
    Investigating the transmission of monetary policy is important for an economy. Many channels exist through which monetary policy decisions affect the economy. This paper examines the bank lending channel, which reflects the central bank's actions that affect loan supply and real spending. It is necessary to understand how effective the channels of transmission are, in affecting economic activities in a given country. This study investigates the transmission of monetary policy through the bank lending channel in Namibia using four variables namely: gross domestic product (GDP), interest rate, inflation and bank lending. The study used a Vector Auto-regression (V AR) approach to estimate time series annual data from Q 1 2009 to Q4 2018. The study employed techniques such as unit root tests, co-integration, impulse responses and variance decomposition. The co integration test results revealed that co-integration exists among variables. The impulse response function showed that output growth responded negatively to repo rate. The increase in interest rate results in a decline in economic activities due to high interest on borrowing and thus a decrease in economic growth. The variance decomposition indicated that fluctuations in output growth were attributed to itself. While the total contribution of interest rate, bank lending and inflation was relatively insignificant. The error forecast of bank lending was attributed by itself with an insignificant contribution of output growth and non by interest rate and inflation. Fluctuations in forecasting interest rate were greatly attributed to bank lending and small contributions by the other variables. The error forecast of inflation was greatly dominated by itself. As the trend fell, there was a significant increase in the contribution of output growth and a slight contribution by the other variables