What the study found
The study found that exchange rate depreciation had a significant positive long-run effect on sectoral credit allocation in Tanzania. In the short run, exchange rate movements had negative effects in some sectors, especially transport and communication.
Why the authors say this matters
The authors suggest the findings matter because they point to different sector responses to currency changes. They conclude the results may help inform sector-specific monetary and exchange rate interventions in volatile macroeconomic settings.
What the researchers tested
The researchers examined how exchange rate movements, measured by both the level and the first difference of the exchange rate, affected sectoral investment decisions in Tanzania. They used sectoral credit allocation as a proxy for investment across manufacturing, agriculture, tourism, construction, and transport and communication, and estimated short-run and long-run effects with an autoregressive distributed lag model using quarterly time-series data. They also controlled for foreign direct investment, gross domestic product growth, and lending interest rates.
What worked and what didn't
Exchange rate depreciation showed a significant positive long-run association with credit allocation across all five sectors studied. In the short run, exchange rate movements had negative effects in some sectors, particularly transport and communication. The abstract does not report the detailed size of these effects beyond these directional findings.
What to keep in mind
The study uses sectoral credit allocation as a proxy for investment, so it does not measure investment directly. The abstract also does not describe limitations beyond noting that the paper examines Tanzania and five named sectors.
Key points
- The study found a significant positive long-run effect of exchange rate depreciation on sectoral credit allocation.
- Short-run exchange rate movements were negative in some sectors, especially transport and communication.
- The analysis covered manufacturing, agriculture, tourism, construction, and transport and communication.
- Sectoral credit allocation was used as a proxy for investment.
- The model controlled for foreign direct investment, GDP growth, and lending interest rates.
Disclosure
- Research title:
- Exchange rate depreciation raised sectoral credit allocation in Tanzania
- Authors:
- Enock Mwakalila, Seif Ramadhani Muba
- Institutions:
- Mzumbe University, Mzumbe University, University of Dar es Salaam
- Publication date:
- 2026-02-27
- OpenAlex record:
- View
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