## Policy Transmission Through Banking: Evidence from Namibia

_Selected Issues Papers, July 10, 2026_

## Source details

**Canonical URL:** [Policy Transmission Through Banking: Evidence from Namibia](https://www.imf.org/en/publications/selected-issues-papers/issues/2026/07/10/policy-transmission-through-banking-evidence-from-namibia-577630)

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## Bibliographic details
- Authors: Yumeng Gu
- Published: July 10, 2026
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798229052672.018

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### Key findings
- The pass-through of policy rates to aggregate banking interest rates in Namibia is primarily driven by the South African Reserve Bank policy rate.
- Effects of domestic policy rates are weaker and less persistent.
- Transmission is asymmetric:
  - Lending rates adjust rapidly and completely, reflecting the prevalence of variable-rate contracts and their linkage to prime rate.
  - Deposit rates respond more slowly and incompletely, consistent with differences in funding structures and pricing behavior across banks.

### Methodology
- The paper uses local projections to quantify the pass-through of domestic and South African policy rates to aggregate banking interest rates in Namibia under a pegged exchange rate regime.

### Implications and interpretation
- Namibia’s pegged exchange rate regime implies strong influence from South African monetary policy on domestic banking rates.
- Rapid and complete adjustment of lending rates suggests borrowing costs for households and firms closely track changes in policy rates linked to prime rate mechanisms.
- Slower and incomplete adjustment of deposit rates points to heterogeneity in bank funding structures and pricing behavior, with potential implications for bank margins and savings returns.

### Subjects and keywords
- Subjects: Central bank policy rate, Deposit rates, Exchange rate arrangements, Financial services, Foreign exchange, Interest rate policy, Monetary policy, Repo rates
- Keywords: Africa, bank deposit rates, bank lending rates, Central bank policy rate, deposit rate, Deposit rates, Exchange rate arrangements, Global, IMF country, IMF staff, interest rate pass-through, Interest rate policy, issues paper, Monetary policy, Namibia, pegged exchange rate regime, Repo rates

*Source: "Policy Transmission Through Banking: Evidence from Namibia", Selected Issues Papers (2026), by Yumeng Gu.*

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_Source: https://www.imf.org/en/publications/selected-issues-papers/issues/2026/07/10/policy-transmission-through-banking-evidence-from-namibia-577630_