Prudential Measures, Monetary Policy and Lending Dynamics in the Agricultural Sector in East Africa

BAHATI Sebasore1, Redempteur Ntawiratsa2, Clément BULA Basuayi2, GAKURU SEMACUMU Jean-Baptiste4, Paul Senzira Ntahayo4, Jonas Uwimana1, & SENGA MATABARO5
1Ph.D student at University of Rwanda, Researcher at the university center for economic and social research and development (CURDS)
2University of Burundi,
3Higher Institute of Pedagogy of Bukavu
4University of Goma,
5Ph.D student at University of Burundi, Researcher at the university center for economic and social research and development (CURDS)
DOI – http://doi.org/10.37502/IJSMR.2025.8508

Summary

This Research Highlights the Effects of Prudential Measures and Monetary Policy on Agricultural Credit in the Eac. Using Panel Data Over a Period of 1990-2020, a Random Effects Model Was Chosen. The Results Show That Monetary Policy Has a Positive and Significant Effect on Agricultural Loans. However, Prudential Measures Do Not Have a Significant Direct Effect on the Latter. Conversely, Agricultural Loans Are Positively Influenced by Prudential Measures. While Political Instability Has a Negative Effect on Agricultural Loans. Atms and Bank Branches Are Associated with a Decrease in Agricultural Credit, Suggesting Unequal Access in Rural Areas. The Study Partially Confirms Theories of Financial Regulation and Economic Growth, While Highlighting the Limitations Related to the Lack of Disaggregated Data and the Failure to Take into Account Specific Local Policies. To Strengthen These Findings, Future Research Could Incorporate Sectoral and Institutional Variables, Extend the Period of Analysis, and Include a Comparison with Other Developing Regions.

Keywords: Agricultural Loans, Prudential Measures, Monetary Policy, Political Stability, Atms, Bank Branches, Political Stability

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