## Credit Growth in Sub-Saharan Africa—Sources, Risks, and Policy Responses

_IMF Working Papers, August 1, 2009_

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## Bibliographic details
- Authors: Plamen K Iossifov
- Published: August 1, 2009
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451873276.001

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### Summary of the paper
- Authors: May Y Khamis, Plamen K Iossifov
- Publication date: August 1, 2009
- Core objective: Analyze credit growth in Sub-Saharan Africa over the past decade with a focus on post-2002 rapid credit growth in select countries.
- Principal approach: Develop regression models of the fundamental determinants of bank credit and use them to examine whether these fundamentals fully explain developments in rapid credit growth countries.
- Key conclusions:
  - Rapid credit expansion, whether a manifestation of a credit boom or driven by fundamentals, can give rise to prudential and macroeconomic risks.
  - The paper details these risks and discusses the choice of policies to mitigate them.
  - The paper concludes by evaluating the likely impact of the ongoing global recession and financial crisis on credit growth in Sub-Saharan Africa.

### Methods and analytical framework
- Regression models of fundamental determinants of bank credit were developed and applied to:
  - Explain overall credit growth patterns in Sub-Saharan Africa over the past decade.
  - Test whether fundamentals can fully explain rapid credit growth in selected post-2002 cases.

### Findings on credit growth drivers
- The analysis focuses on distinguishing credit expansion explained by fundamentals from rapid credit growth that may constitute a credit boom.
- The paper identifies that both fundamentals and non-fundamental factors can be associated with rapid credit expansion in post-2002 select countries.

### Prudential and macroeconomic risks identified
- Rapid credit expansion can give rise to:
  - Prudential risks (banking-sector vulnerabilities).
  - Macroeconomic risks (broader economic imbalances related to credit cycles).

### Policy responses and recommendations
- The paper discusses policy choices to mitigate the identified prudential and macroeconomic risks arising from rapid credit expansion.
- Policy discussion centers on aligning prudential measures and macroeconomic management to address risks whether credit growth is fundamental-driven or boom-driven.

### Assessment of global recession and financial crisis impact
- The paper evaluates the likely impact of the ongoing global recession and financial crisis (as of the paper’s writing) on credit growth in Sub-Saharan Africa.

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/credit-growth-in-sub-saharan-africa-sources-risks-and-policy-responses-23229_