The balance between financial inclusion and macroprudential policy in South Africa is the focus of a recent study. The research examines how these regulations impact bank lending rates and volumes among the country's largest banks. Financial inclusion aims to extend affordable credit, which could affect the stability of the financial sector. In contrast, macroprudential policy seeks to mitigate financial risks.
According to the study, "macroprudential policy is working as intended," showing an association with increased interest rates on unsecured lending and decreased rates for short-term secured and mortgage loans. Meanwhile, regulations focused on inclusion are linked to higher bank lending rates in unsecured credit.
The findings indicate a decline in unsecured lending growth for households and a rise in secured lending for corporates. Notably, "the estimated effects of financial inclusion initiatives largely overlap with – rather than offset – the estimated effects of macroprudential policy."