Author: Simon Sigué.

This paper examines whether bank lending is constrained by monetary policy in Ghana. We use panel data covering the period, 1998 to 2004 from the database of Bank of Ghana and International Financial Statistics of IMF. The study reveals that Ghanaian banks lending behaviours are affected significantly by the country’s economic activities and changes in money supply. The results of this study also support the findings of previous studies that the central bank’s prime rate and inflation rate negatively affect bank lending. While the result on the prime rate is statistically significant, that of the inflation is insignificant. With the firm level characteristics, the study reveals that bank size and liquidity significantly influence banks’ ability to extend credit when demanded. The main value of this study is the identification of the monetary policy tools that influence bank lending behaviour in Ghana.