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Was There a Credit Crunch in Namibia Between 1996-2000?

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Abstract
Commercial bank credit is a useful tool for promoting economic growth especially at the early stages of development. It has been observed that between 1996 and the early part of 2000, the growth rate of real credit to the private sector declined significantly in Namibia. This period coincided with observed strong demand for commercial bank loans. There has therefore been public discourse on the possibility of a restriction in the supply of credit by commercial banks and hence the occurrence of a credit crunch in the economy since commercial bank lending capacity did not fall. This paper attempts to provide some evidence in this regard by examining the main determinants of commercial bank credit in the economy and ascertaining if credit has been demand or supply constrained. This has been done through a survey of disaggregated data in the banking industry and an estimation of a switching regression model to identify regimes of excess supply and demand. Although it is difficult to determine in the face of obvious demand factors the extent to which the credit slowdown can be attributed to credit supply factors, our results show that supply factors did play a major role.

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  • Sylvanus Ikhide, 2003. "Was There a Credit Crunch in Namibia Between 1996-2000?," Journal of Applied Economics, Universidad del CEMA, vol. 6, pages 269-290, November.
    • Handle: RePEc:cem:jaecon:v:6:y:2003:n:2:p:269-290
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    2. Paolo Del Giovane & Andrea Nobili & Federico M. Signoretti, 2017. "Assessing the Sources of Credit Supply Tightening: Was the Sovereign Debt Crisis Different from Lehman?," International Journal of Central Banking, International Journal of Central Banking, vol. 13(2), pages 197-234, June.
    3. Khemraj, Tarron & Primus, Keyra, 2013. "Testing for the Credit Crunch in Trinidad and Tobago Using an Alternative Method," MPRA Paper 47372, University Library of Munich, Germany.
    4. Aloysius Deno Hervino, 2011. "Avoiding risk in working capital credit distribution in Indonesia," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 3(2), pages 199-210, April.
    5. Tarron Khemraj, 2007. "What does excess bank liquidity say about the loan market in Less Developed Countries?," Working Papers 60, United Nations, Department of Economics and Social Affairs.
    6. Shaffer, Sherrill & Hoover, Scott, 2008. "Endogenous screening, credit crunches, and competition in laxity," Review of Financial Economics, Elsevier, vol. 17(4), pages 296-314, December.
    7. Tamini, Arnaud & Petey, Joël, 2021. "Hoarding of reserves in the banking industry: Explaining the African paradox," The Quarterly Review of Economics and Finance, Elsevier, vol. 81(C), pages 214-225.
    8. Nada Oulidi & Laurence Allain, 2009. "Credit Market in Morocco: A Disequilibrium Approach," IMF Working Papers 2009/053, International Monetary Fund.

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    More about this item

    Keywords

    Africa; Namibia; credit crunch; asymmetric information; economic growth :;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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