Commercial Banks’ Lending Rates, Capital Reserve Ratio and Monetary Policy in Africa

An important indicator of monetary policy's ability to control inflation or maintain economic stability is the impact it has on commercial banks' lending rates and cash reserve ratio. This research uses a dynamic systemgeneralized method of moments (GMM) estimation strategy to analyse the effect of monetary policy on lending rate of commercial banks. The study also incorporated longitudinal data mostly collected from the international monetary fund (IMF), and world development indicators between the years 2002 and 2021. The research found that commercial banks' lending rate are significantly correlated with monetary policy. Additional empirical analysis confirmed a positive relationship between monetary policy and the commercial banking industry's cash reserve ratio. As a means of spurring economic development across the continent, it has been proposed that African central banks use a strategy that combines inflation with measures designed to boost output.