This study aims primarily at investigating the impact of\r\nmacroeconomic instability on banking sector lending behaviour in Ghana\r\nusing data on commercial banks and macroeconomic instability from 1992 to\r\n2009. My results under the Co-integration and Vector Error Correction\r\nModeling framework show that bank lending has a long-run relationship\r\nwith macroeconomic instability. The study therefore, recommends that while\r\nbanks should pay adequate attention to the consequences of their firm\r\nspecific characteristics in their lending activities both in the short-run and\r\nlong-run, their worries about macroeconomic instability should be limited to\r\nthe long-run consequences on their lending behaviour. It is also pertinent that\r\nappropriate measures be taken to curtail inflation and sporadic money supply\r\ngrowth making banks become unfavourably disposed to lending given the\r\nattendant negative consequences of loan curtailment on economic growth in\r\nthe long run.
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