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We study the impact of unexpected climate shocks on banks' individual and systemic risks. Employing climate risk measures developed using the Billion-Dollar Weather and Climate Disasters data from the National Oceanic and Atmospheric Administration (NOAA) and Dealscan syndicated lending data, we find that climate risk exposure acquired through cross-state lending increases banks' individual and systemic risks. We also find that bank profitability helps offset some of the adverse effects of climate risk. Banks reduce lending and increase loan loss reserves after the experience of an unexpected climate shock. The loan-level analysis reveals that the effect of climate risk exposure on bank risks is more pronounced for loans granted for operating and capital expenditures. We contribute to a growing literature on the impact of climate risk on financial stability and the development of robust measures of climate risk for banks. [ABSTRACT FROM AUTHOR]

We investigate how local deposit shocks affect bank lending in nonaffected markets for the case where banks mostly neutralize that shock. Colombian banks in oil-producing municipalities experienced deposit outflows after the collapse of oil prices in 2014–2015. Following the shock, we observe that the affected banks increased their credit to non-oil-producing markets by reducing the price of consumer loans and by using market power in both commercial and consumer loans. This paper contributes to understanding how multimarket banks transmit local deposit shocks to other geographic markets to mitigate deposit outflows. [ABSTRACT FROM AUTHOR]

Objective: The study examines the efficiency and influence of bank loans on Zimbabwe's agricultural growth. The main objectives are to assess how bank lending affects agricultural output and identify the key factors affecting its effectiveness. Approach: This research uses the Vector Error Correction Model (VECM) approach to examine the long-term and short-term relationships between bank credit and agricultural output. Results: Extending credit availability may help agricultural development, as the study indicates a strong long-term positive association between bank credit and agricultural production. However, the short-term study yields inconsistent findings, with variations brought on by outside forces, including shifting policies, unstable economies, and unfavourable weather patterns. This suggests that structural problems in the banking or agriculture sectors impede quick recovery. While bank credit is critical in enhancing agricultural growth in Zimbabwe, its effectiveness is contingent upon a stable economic environment and supportive policies. Implication: Therefore, to maximise the impact of bank lending, policymakers should focus on improving financial infrastructure, mitigating external risks, and creating a conducive environment for agricultural investments. Value: This study uniquely examines the impact of bank credit on agricultural productivity in Zimbabwe using a comprehensive set of economic and non-economic variables and advanced econometric methods, providing new, context-specific insights and practical policy recommendations for enhancing agricultural growth in a challenging environment. [ABSTRACT FROM AUTHOR]

Understanding the impact of economic factors on bank lending is crucial in Kazakhstan’s modern economy, characterized by volatile inflation and fluctuations in real wages. This paper aims to investigate the link between bank lending and economic factors such as inflation, real wages, and consumer expenditure in a regional context. Data from the Bureau of National Statistics and the National Bank, covering the period from 2012 to 2022, were used to uncover how economic factors influence bank lending. For the analysis, various economic indicators were integrated through normalization and averaging. Analysis reveals significant regional disparities in real wages and consumer expenditures, which impact the demand for bank credit. The results of the correlation matrix showed that both real wages (P-value < 0.001) and inflation (P-value < 0.001) significantly impact bank lending, with an R² value of 0.998, indicating that the model explains 99.8% of the variation in bank lending. The regression analysis highlights that regions with higher real wages, such as Astana, Almaty, and Atyrau, provide the most favorable conditions for banking sector growth, demonstrated by a strong relationship between wages and bank lending. In contrast, regions with lower wage levels, such as Turkestan and Zhambyl, show a significantly weaker connection (around 0.65), reflecting their lower attractiveness for banking investment and emphasizing the need for policies to address social inequality. The Durbin-Watson test confirmed no autocorrelation in residuals (DW = 1.89), although heteroscedasticity was detected, suggesting the need for further model adjustments. The study emphasizes the importance of developing economic policies that can balance regional development and improve financial stability. AcknowledgmentsThis research has been funded by the Science Committee of the Ministry of Science and Higher Education of the Republic of Kazakhstan (Grant “Development of mechanisms for reducing social inequality and improving the welfare of the population of Kazakhstan” AP19174744).

We examine the significance and uniqueness of individual-pair relationships cultivated through repeated loan interactions. Using a hand-collected dataset compiled of borrowing manager and loan officer information, we find that individual-pair relationship loans are associated with a cost-of-debt reduction of between seven to 13 basis points. We also document that the relationship has an economic impact even when other affiliations, for example, institutional pairs, social ties, cultural proximity, and gender, are considered. Individual-pair relationships matter because they furnish lenders with useful soft information, especially when the firm has a poor hard information environment or when the bank and loan officer rely less on hard information. In addition, we find that individual-pair relationship loans have fewer rating downgrades, suggesting that accumulated soft information leads to better loan quality. Collectively, our results highlight the unique value of sustained professional engagement between two individuals in the lending process. [ABSTRACT FROM AUTHOR]

The aim of this study is to investigate the impact of financial regulations on bank lending in emerging economies in Sub-Saharan Africa. The dynamic system-generalized method of measures (GMM) is used to address difficulties such as unexplained periods and nation-specific implications, besides the endogeneity of the variables in question. Spanning from 2012 to 2022, the research used data from 80 banks in 20 sub-Saharan African nations. The findings show that expansive financial regulation, which includes a boost in the amount of cash in circulation, induces bank lending. At the same time, restrictive financial regulations, with the value as an improvement in interest rates by central banks, lead to credit contractions, albeit with little impact because of the attainable poverty of banking sectors, organizational limitations, bank-focused attention, and additional system rigidity typical of developing nations, which compromises the efficiency of the system. Other characteristics that substantially impact bank lending routes include capital sufficiency ratios and the scale of economic activity. Sub-Saharan African countries may boost the efficiency of financial regulations propagation on bank lending by making better use of the transfer process of fluctuations in cash supplies and interest rates.

We investigate the bank lending channel of negative nominal policy rates from an empirical and theoretical perspective. For the empirical results, we rely on Swedish data, including daily bank-level lending rates. We find that retail household deposit rates are subject to a lower bound (DLB). Empirically, once the DLB is met, the pass-through to mortgage lending rates and credit volumes is substantially lower and bank equity values decline in response to further policy rate cuts. We construct a banking sector model and use our estimate of the pass-through of negative policy rates to lending rates as an identified moment to parameterize the model and assess the impact of negative policy rates in general equilibrium. Using the theoretical framework, we derive a sufficient statistic for when negative policy rates are expansionary and when they are not. [ABSTRACT FROM AUTHOR]

The main objective of the present study is to investigate the international spillover effect of US monetary policies on bank lending for 34 upper-middle-income countries during the period of 2000-2021. For this purpose, Panel Smooth Transition Regression model (PSTR) method has been used to estimate the model of this research. Based on the estimation results, the model includes two regimes and its transition variable is the monetary policy rate of the United States, which is not significant in the first regime and is negative and significant in the second regime. So, with the reduction of interest rates and the implementation of expansionary monetary policies in the United States, the lending rate in the studied countries increases; and vice versa. Based on the results obtained and the lack of independence of monetary policies in the studied countries, it is recommended that the countries make their internal economic conditions more stable than the external conditions with targeted policies and somehow secure their economy against external shocks. [ABSTRACT FROM AUTHOR]

The study investigated the effect of bank capital ratio on bank lending depending on the liquidity level of 33 banks in Pakistan by using a two-step system GMM between 2006 and 2021. The empirical results suggest that bank capital is positively associated with lending, whereas bank liquidity is negatively related when the whole sample is taken and is negative for domestic banks. Besides, the interaction effect between capital and liquidity is positive (favourable) for domestic banks and negative (unfavourable) for the whole sample. The study provides implications for banking institutions and policymakers. Firstly, the assessment of the effectiveness of various determinants of bank lending is a prerequisite for any effort to improve the lending by the banks in Pakistan. Moreover, any policy to improve bank lending should be devised considering the relationship between capital and liquidity requirements. [ABSTRACT FROM AUTHOR]

Purpose: The objective of this study was to investigate the effect of economic and geopolitical risks on the lending decisions, credit risk, performance, and stability of banks in South Africa. Design/Methodology/Approach: To achieve this objective, ten banks were assessed for the period ranging from 2013 to 2022, and panel regressions were estimated with cross-sectional fixed effects. Findings: The results show that economic policy uncertainty (EPU) decreases credit risk and increases stability in the South African banking sector whilst geopolitical risk (GPR) increases credit risk and decreases stability. Further, it was found that these effects are more pronounced in banks with smaller market capitalizations and higher equity capitalizations. Moreover, global GPR has a destabilizing effect on South African banks. Remarkably, both EPU and GPR do not significantly influence lending decisions and performance by banks in South Africa. Practical Implications: This research enables a greater understanding of the determinants of banks’ lending decisions, credit risk, performance, and stability which is essential for devising governance policies and regulations to reduce fragilities in the banking system. Originality/Value: Given the scarcity of banking sector research in emerging markets, this study contributes to the existing literature by investigating the role of EPU and GPR on banking sector dynamics which remains understudied in South Africa.

This study analyzes how fintech credit affects bank lending in Sub-Saharan Africa (SSA) and how this relationship is influenced by financial inclusion measured by bank branch networks. We utilized the system GMM to examine data spanning 19 SSA economies from 2013 to 2019. This study finds that fintech credit has a mixed effect on bank lending in SSA, depending on how it is measured. When fintech is measured by total alternative credit (fintech and Bigtech credit), there is a negative and significant relationship between Fintech and bank lending in SSA economies, suggesting that some borrowers are shifting towards fintech options. However, we observe a positive and significant relationship when we focus solely on fintech credit, suggesting that fintech can complement traditional bank lending, potentially by expanding access to financial services. Furthermore, this study underscores the importance of the presence of physical banks. Fintech lending growth has a negative net effect on bank lending when traditional banks reduce their branch network. This suggests that physical branches remain crucial for financial inclusion, particularly in areas with a limited digital infrastructure. These insights offer valuable guidance for policymakers and industry leaders seeking to promote financial inclusion and stability in SSA’s evolving financial landscape.

Copyright of Strategic Universe Journal / Univers Strategic is the property of Dimitrie Cantemir Christian University, Institute for Security Studies and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

CreditScore combines the predictive power of crop growth models with future climatic scenarios, satellite images, and market data to form a comprehensive profile for each farmer-borrower, based on the future yields of their crops, with the ultimate goal of assessing long-term risks affecting yields which are related to climate change. The objective of this study is to present the tools and datasets that are employed operationally by CreditScore for future yield and profitability assessments. A modeling approach built on a fusion of satellite-derived vegetation indices, agro-meteorological indicators, and crop phenology is tested and evaluated in terms of data intensiveness for the prediction of wheat and cotton yields. AquaCrop, a process-based model, provided high to moderate accuracies by fully relying on freely available datasets as sources of input data. The findings introduce a promising framework that can support the financial institutions in evaluating potential customers' agribusinesses prior to and throughout the lending process. [ABSTRACT FROM AUTHOR]

Mandatory credit allocation is a policy intervention to pressure banks to lend to certain sectors that otherwise unfettered finance would not give access to. While some would argue that mandatory credit allocation results in sub-optimal allocation of resources, it has been shown that such intervention results is socially desirable outcome. However, mandatory credit allocation should not be the responsibility of banks only, it must be supported with government guarantees. In the Philippines, there are three sectors in which mandatory credit allocation is given namely the agriculture sector, the micro, small and medium enterprises or MSME sector, and enterprises involved in innovation. In agriculture, the credit allocation is too big and therefore should be reviewed, in MSME too small and therefore should also be reviewed, and in innovation difficult to identify and impractical to implement. In all of these, the banks are left to shoulder the respective mission with practically no government support. Banks either comply or pay the penalty. [ABSTRACT FROM AUTHOR]

The relevance of the study is that the pandemic has affected the financial stability of many businesses. The purpose of the study is to consider the features of bank lending to businesses in a pandemic. Providing credit in the era of the coronavirus is associated with increased risk. However, this does not mean that it is impossible to obtain new funding. Banks still offer a variety of credit products, including mortgages and cash or credit card loans. Changes in the level of debt mask the distinction between new borrowings and repayments of existing amounts. Business loans are mostly short-term, and their rates can be adjusted relatively easily. Historical data shows that on average, 90% of new business loans have a variable or fixed rate with a maturity of less than one year. The huge surge in loans to new businesses is primarily conditioned upon this short-term financing. The speed and scale of the return of the gap to the pandemic is unprecedented. The practical significance lies in the analysis of problems and obstacles to bank lending to businesses in a pandemic, and ways to solve them. [ABSTRACT FROM AUTHOR]

This paper investigates the impact in the short/medium term of M&As made by 14 Italian banks quoted on the stock exchange for the period 1999–2016. After dividing the banks into two groups by size and degree of internationalisation, we sought to ascertain whether different initial conditions produce different final effects. Based on three assumptions, supported by three separate econometric approaches, our empirical analysis shows that the stronger banks increased their competitiveness while the weaker banks did not achieve the same results since they were motivated to grow "by desperation". [ABSTRACT FROM AUTHOR]

The study examines the current topic of bank lending in modern Ukrainian conditions. By analyzing the dynamics of credit activity and the financial condition of banks in Ukraine, the work reveals the main problems affecting this sector, such as a large share of non-performing loans, a decrease in the share of long-term loans, and a high lending rate. The conclusions of the work provide recommendations for improving the situation on the lending market in Ukraine. The modern economy of Ukraine is experiencing complex challenges related to the war in Ukraine, which was preceded by the COVID-19 pandemic and the global economic crisis. In this context, the article examines the role of credit as a key driver of economic stability and post-victory recovery. The study is based on the analysis of available data and literature sources, and also uses empirical methods to determine the impact of lending on economic recovery. The article highlights key aspects of lending, such as the role of banks, loan volumes, interest rates and overdue loans. The results of the study emphasize the importance of the development of the financial sector and the promotion of credit availability for enterprises and the population in the context of the economic recovery of Ukraine. The authors provide practical recommendations for the government and regulators to improve the credit environment and stimulate investment activity. This article is aimed at opening discussions and promoting further research into the role of lending in stimulating the economic recovery of Ukraine in the face of today's extremely complex challenges and may be useful for economists, theoreticians and practitioners. The scientific study analyzes how lending can affect the financial stability of Ukraine, in particular, how it can reduce financial risks and contribute to the stability of the economy. The impact of credit availability for various areas and sectors of the economy is considered. The article offers an important contribution to understanding and improving the effectiveness of lending as a tool for the economic recovery of Ukraine, emphasizing the need for a coordinated approach to this issue, taking into account the unique challenges and opportunities that exist at this stage of the country's development.

Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This study investigates the dual impact of peer-to-peer (P2P) FinTech lending and the COVID-19 pandemic on bank lending in Indonesia spanning from 2016 to 2022. Rooted in Christensen's theory of disruptive innovation, the research underscores how FinTech startups, by leveraging innovative technology, create intense competition for traditional banks (Christensen, 1997). Analyzing data from 121 banks, the findings reveal that the proliferation of P2P lending negatively influences bank loan growth, indicating a potential diversion of borrowers from traditional institutions. Surprisingly, the COVID-19 pandemic exhibits no significant impact on overall bank lending, highlighting the sector's stability owing to government and financial institution interventions. Notably, when scrutinizing the joint impact of P2P lending and the pandemic, a positive effect on bank lending emerges, particularly benefiting smaller banks. This suggests that P2P lending activities complement traditional bank lending, especially during challenging periods like the pandemic. Smaller banks, in particular, demonstrate adaptability and resilience by strategically leveraging P2P lending, countering disruptions. The study underscores the pivotal role of smaller banks in navigating economic challenges, providing valuable insights for policymakers, regulators, and financial institutions to adapt to the evolving landscape of financial technology and enhance financial access for the public. [ABSTRACT FROM AUTHOR]

Purpose: The objective of this study was to investigate the effect of economic and geopolitical risks on the lending decisions, credit risk, performance, and stability of banks in South Africa. Design/Methodology/Approach: To achieve this objective, ten banks were assessed for the period ranging from 2013 to 2022, and panel regressions were estimated with cross-sectional fixed effects. Findings: The results show that economic policy uncertainty (EPU) decreases credit risk and increases stability in the South African banking sector whilst geopolitical risk (GPR) increases credit risk and decreases stability. Further, it was found that these effects are more pronounced in banks with smaller market capitalizations and higher equity capitalizations. Moreover, global GPR has a destabilizing effect on South African banks. Remarkably, both EPU and GPR do not significantly influence lending decisions and performance by banks in South Africa. Practical Implications: This research enables a greater understanding of the determinants of banks' lending decisions, credit risk, performance, and stability which is essential for devising governance policies and regulations to reduce fragilities in the banking system. Originality/Value: Given the scarcity of banking sector research in emerging markets, this study contributes to the existing literature by investigating the role of EPU and GPR on banking sector dynamics which remains understudied in South Africa. [ABSTRACT FROM AUTHOR]

This research aims to investigate the effects of the bank lending channel of monetary policy on capital markets in seventeen emerging market economies, which are comprised of bank-level data from 5589 banks and 76518 observations within the sample period from 2006 to 2021. This research concentrates on the bank lending channel because of the significant effect that banks have on the economy and financial markets. While monetary policy is vital and has various transmission channels into the actual economy, the bank lending channel will therefore, be the primary focus of this study. The study utilizes a dynamic panel model with sys-GMM and fixed effect model along with performing robustness checks, firstly by performing instrumental variable regressions and secondly by taking higher lags from the data sample. Among the countries included in the study, monetary policy has a negative impact on bank lending, while economic growth has a positive effect, according to the financial development indicators. The study findings suggest that the bank lending channel influences the capital markets. [ABSTRACT FROM AUTHOR]

We examine how the cost of issuing equity affects bank lending. Using the SEC rule change that allowed exchange‐listed firms with public float less than $75 million to raise equity via shelf registrations as a quasi‐natural experiment, we show that the affected banks increase mortgage lending relative to control banks. Furthermore, the affected banks reduce demand for precautionary capital and become less likely to sell mortgages to third parties. [ABSTRACT FROM AUTHOR]

This study aims to examine the effects of bank lending channel of monetary policy on capital markets in seventeen emerging countries comprising of 5,574 banks over the sampled years from 2006-2021. Due to the importance of monetary policy and its transmission effect into the real economy via multiple channels, this research will focus on the bank lending channel because of the significant effects which banks have on the economy and financial markets. The study utilizes dynamic panel model with sys-GMM and fixed effect regressions along with performing robustness check, firstly by performing instrumental variable regressions and secondly by taking higher lags from the data sample. Results of the study indicate that bank lending channel operates in the capital markets. The financial development indicators exhibit a strong and significant effect on bank lending channel where monetary policy negatively affects and economic growth positively influences bank lending in the sampled countries. [ABSTRACT FROM AUTHOR]

Purpose: The fundamental objective of the study is to characterise the features that accompany ESG risk management processes in Polish companies financing green investments with a bank credit. Design approach: The study focuses on the observation of changes occurring in the concept and processes of ESG risk management following the so-called Paris Agreement of 2015. The EU regulations standardising the ESG risk management process in companies and banks have been analysed, indicating the differences resulting from them. The inclusion of ESG risks both in creditors and credit recipients is achieved through various channels, determining the extent, and expected outcomes of green investments. Without a doubt, the issue has been receiving considerable research attention in many papers since the energy crisis caused by Russia’s aggression against Ukraine. However, in light of EU regulatory changes and the increased interest of business entities in green financing, uncertainties, and research problems are on the rise in this area. An evident limitation of the conducted research is the lack of empirical data completing the knowledge on the effects of ESG strategies both domestically and in EU member states. Therefore, the paper draws on questionnaire surveys conducted by the authors, as well as on the findings of various reports published on the subject. Findings: The research shows that EU regulations increase the security of financing green investments in both companies and banks. The concept of sustainable development and ESG risk management associated with it have been severely curtailed through their introduction. Nevertheless, there is a fairly substantial area of uncertainty associated with the process of financing green investments. The study analyses its determinants indicating that internal ESG risk management procedures of companies and banks do not eliminate the external risks of financing corporate green investments. Originality/value: The conducted research undoubtedly broadens the knowledge about the role and significance of ESG risk in the green investment financing process. The analysis of studies relating to ESG risk, taking into consideration EU documents, contributed to exposing unexplained, debatable, and unsolvable issues. The questionnaire survey as well as the secondary data obtained made it possible to verify the number of common opinions and statements, along with the main hypothesis of the paper. [ABSTRACT FROM AUTHOR]

We formulate a continuous-time model of a deposit taking bank, operating subject to capital adequacy regulation, and where the bank's loans are exposed to default risk. The bank maximises its market value of equity by appropriately controlling loan and equity issuance, dividend payments, and endogenous closure. Of interest to regulators, we show how the bank responds to the span of capital adequacy requirements and to changes in default variance. We find a nonmonotonic response of bank lending to increased capital requirements (initially increasing and then decreasing). We also find that the probability of early closure (through either insolvency or endogenous closure) can be minimised for a well-chosen capital adequacy ratio. Moreover, the level of capital requirement that minimises the probability of early closure and maximises lending is fairly robust to changes in the bank's default variance/risk; contributing to the ongoing discussion on optimal bank capital. [ABSTRACT FROM AUTHOR]

Mandatory credit allocation is a policy intervention to pressure banks to lend to certain sectors that otherwise unfettered finance would not give access to. While some would argue that mandatory credit allocation results in sub-optimal allocation of resources, it has been shown that such intervention results is socially desirable outcome. However, mandatory credit allocation should not be the responsibility of banks only, it must be supported with government guarantees. In the Philippines, there are three sectors in which mandatory credit allocation is given namely the agriculture sector, the micro, small and medium enterprises or MSME sector, and enterprises involved in innovation. In agriculture, the credit allocation is too big and therefore should be reviewed, in MSME too small and therefore should also be reviewed, and in innovation difficult to identify and impractical to implement. In all of these, the banks are left to shoulder the respective mission with practically no government support. Banks either comply or pay the penalty.

The article emphasizes the urgency of forming and implementing a public policy for the development of bank lending, as well as improving the financial support of domestic business in wartime conditions. The purpose of the study is to conduct an analysis of the state of bank lending and determine the directions and means of stabilizing the financial support of business in Ukraine in wartime conditions. It is shown that the full-scale war caused significant negative consequences for Ukrainian business, destabilizing both the production and consumption of goods and services, exposing the resource needs of business, significantly worsening the financial and economic condition of business entities; in more than 80% of them the volume of activity decreased in 2022; a third of business representatives saw their business reduced to 20%; in more than half – by 21% or more. The article analyzes the data of the National Bank of Ukraine (for 2019–2023) on the volume and structure of bank lending in Ukraine, the structural ratios of the volume of bank lending to legal entities and individuals in Ukraine, indicators of bank lending to the national economy of Ukraine, levels of securing bank loans with reserves in Ukraine, indicators of corporate loan portfolio in Ukraine by types of economic activity in 2023. It was concluded that the implementation of the financial policy of domestic enterprises in wartime conditions, aimed at their stable and balanced development, involves the connection of such basic aspects as sources of funds formation, vision of prospects for further progress, as well as directions for realization of financial potential. For this, enterprises should form complex subsystems for the formation of financial resources of the enterprise, consisting of attracting funds from own (own capital and investments in the business, financial result from increasing the efficiency of management) and involved sources, as well as applying for the financial capabilities of the institutional and project integration of the enterprise.

The development of Ukraine’s credit market occurs under periodic economic crises. Available destructive processes inhibit the development of credit relations, negatively affecting the lending of economic entities and restraining the development of the national economy. This study aims to highlight the basic transformations in the development of the credit market of Ukraine, which are formed in macroeconomic instability. The economic development trends in Ukraine were assessed using classical statistical methods. The correlation regression analysis was used to analyze the influence of macroeconomic parameters (exchange rate, average salary, and cost of loans) on the volume of bank lending. The results show that the national economy of Ukraine during 2005–2021 developed in the conditions of periodic macroeconomic instability, and the pre-crisis (an indicator of 2013) parameters of bank lending volumes have not restored within the credit market. The paper stresses the significant impact of the COVID-19 pandemic: in 2020, the volume of bank lending decreased by 10.38 billion USD. Moreover, the econometric analysis of the influence of specific macroeconomic parameters (exchange rate, average salary, and cost of loans) on the development of bank lending in Ukraine demonstrated that the stability of the national currency exerts the greatest influence on the lending processes of economic entities in Ukraine. Its provision in the long term allows the creation of favorable conditions for the credit market functioning after the shock periods. Acknowledgment This study is conducted within the framework of the scientific project “Transformation of the households’ behavior in the financial services market in the context of digitalization” with the support of the Ministry of Education and Science of Ukraine.

AbstractThis paper aims to analyze changes in the transmission of monetary policy via bank lending when considering the impact of the COVID-19 pandemic and the financial crisis. Using bank-level data of 31 commercial banks in Vietnam from 2007 to 2021, we provide consistent evidence that the impact of monetary policy on bank lending tends to be more pronounced in the period of the COVID-19 pandemic. Besides, we document that the bank’s loan supply is more sensitive to monetary policy adjustments during the global financial crisis. Thus, a general pattern can be detected, i.e. the monetary policy transmission through the bank lending channel is stronger under unfavorable macro contexts in Vietnam. Accordingly, it can be suggested that adjustments in the monetary policy of the central bank have still been effective in periods of macro difficulty and the implementation of unconventional monetary policy in Vietnam is not necessary yet. Regression results when using the sample-splitting technique are consistent with those using interactive variables, providing evidence to confirm the robustness of the findings obtained in the study.

AbstractThis paper examines the impact of monetary policy instruments such as discount rate, reserve requirement and liquidity requirement on bank credit to the private sector in the Kingdom of Eswatini. Monthly data sourced from the Central Bank of Eswatini and Eswatini Central Statistics Office is used for the period January 2000 to December 2017. Using the Johansen cointegration test and Vector Error Correction Model, our results show that: there is one cointegration in the model and the current levels of the discount rate, reserve requirement and liquidity requirement bear a negative and significant effect to bank credit to the private sector. This indicates that the three instruments are not supportive to economic growth and they are not optimal to stimulate credit. Applying the Quadratic approach, findings of this study reveal that the optimal monetary policy mix (thresholds) to stimulate bank credit to the private sector while maintaining inflation within reasonable levels is 5.42% for the discount rate, 4.03% for the reserve requirement, 12.48% for the liquidity requirement. The study recommends that the Central Bank of Eswatini should always take into account the existence of trade-off in monetary policy instruments results in order to stimulate bank lending to the private sector.

This study investigates the impact of bank regulation and supervision on bank credit in 23 Sub-Saharan African (SSA) countries and their low- and middle-income groups from 1995 to 2017. The long-run results indicated that stringent entry barriers and supervisory power reduced lending, but supervisory power mitigated the negative effect of entry barriers. Furthermore, positive shocks to entry barriers impacted negatively on bank credit, while negative shocks to capital requirements had an adverse impact on lending. In the short run, positive shocks to entry barriers, activity restrictions and capital regulations led to increases in bank credit, particularly in low-income SSA economies. [ABSTRACT FROM AUTHOR]

The role of bank liquidity in monetary policy transmission has received insufficient attention in the literature. Faced with monetary tightening, banks with more liquidity can sell off securities and protect their loan portfolios. We test this proposition using panel data for Indian banks during 2005–2020. Employing dynamic threshold panel regressions with liquid assets as the threshold variable, we show that bank lending declines with monetary policy tightening in low liquidity regimes, but not in high liquidity regimes. We also find evidence for different portfolio reallocation behaviour by banks in high versus low liquidity regimes in response to monetary policy changes. [ABSTRACT FROM AUTHOR]

This paper investigates how bank funding diversity and lending affect bank performance, especially during the Covid-19 pandemic. We employ the Generalized Method of Moments to analyze unbalanced panels of commercial banks in China, Taiwan, and Vietnam. The empirical results show that a percentage increase in bank funding diversity and bank lending in the sample negatively affects profitability. In contrast, the results are mixed in each country due to different market microstructures. While holding diversified funding strengthens bank profitability during the pandemic, increasing lending activities dampers the bank's performance. Finally, this research has important implications for bank managers and regulators to develop sustainable banking performance in emerging markets, especially during pandemics. Plain Language Summary: This paper investigates how bank funding diversity and lending affect bank performance, especially during the Covid-19 pandemic. We employ the Generalized Method of Moments to analyze unbalanced panels of commercial banks in China, Taiwan, and Vietnam. The empirical results show that a percentage increase in bank funding diversity and bank lending in the sample negatively affects profitability. In contrast, the results are mixed in each country due to different market microstructures. While holding diversified funding strengthens bank profitability during the pandemic, increasing lending activities dampers the bank's performance. Finally, this research has important implications for bank managers and regulators to develop sustainable banking performance in emerging markets, especially during pandemics. [ABSTRACT FROM AUTHOR]

This research aims to examine whether banks can employ interest-rate derivatives to mitigate or intensify the effects of economic policy uncertainty on bank lending. By testing two opposing hypotheses, it offers valuable insights into how the interplay between bank lending, interest-rate derivatives, and EPU can influence bank's loan growth. Using a sample of 1,285 Bank Holding Companies (BHCs) for the period from 1986 to 2017, panel regression analysis confirms a negative relationship between EPU and Commercial Industrial (C&I) loan growth. This negative association is not only statistically significant but also economically meaningful. Specifically, when EPU increases by one standard deviation, bank holding companies (BHCs) experience a decrease in loan growth rate by 91 basis points. While derivative users exhibit a significantly higher mean loan growth compared to non-users, the interaction term between interest-rate derivative usage and EPU is negative and statistically significant. This suggests that the usage of interest-rate derivatives aggravates the negative impact of EPU on bank lending. [ABSTRACT FROM AUTHOR]

This study examines the role of auditors and monitoring banks in the tax aggressiveness of private firms. We use a unique data set of private small and medium-sized entities (SMEs) in Finland where book-tax alignment is high and the auditing of private firms (exceeding a low threshold) is mandatory. We add to the existing literature by investigating the auditing of small private firms and using more detailed measures for bank monitoring. Our results suggest a positive association between tax aggressiveness and audit quality, implying that auditors play a greater role in providing tax-related planning services than restraining tax aggressiveness. Furthermore, bank monitoring is positively associated with tax aggressiveness. This is consistent with lending banks being more interested in cash savings than reducing tax aggressiveness. Finally, we find no evidence of a joint effect of auditing and bank relationships. These results will interest the owners and managers of private companies, tax authorities and banks and the accounting and auditing profession. [ABSTRACT FROM AUTHOR]

Small- and medium-sized enterprises (SMEs) account for two-thirds of employment in the euro area which makes them a priority for the transmission of monetary policy to the real economy. SMEs in Europe experienced a credit crunch following the sovereign debt crisis. Over the period 2014–2019, the European Central Bank (ECB) engaged in unconventional monetary policy (UMP) to restore funding conditions in the euro area, to support stronger economic growth and higher inflation. We use the ECB/EC Survey on the Access to Finance of Enterprises to examine the relationship between monetary policy and SME access to finance in countries that were most affected by the crisis as follows: Greece, Ireland, Italy, Portugal and Spain. We show that the implementation of UMP increases the probability that firms with higher debt-to-assets ratio remain credit constrained in stressed countries, although this effect becomes insignificant in non-stressed countries. Our findings suggest that monetary policy is transmitted unevenly to leveraged SMEs across jurisdictions. Additionally, we find little evidence that risky firms are credit constrained during periods of UMP, when risk is measured from the firms' own viewpoint. However, our heterogenous analysis shows that smaller and younger firms—which are also considered to be risky—remain credit constrained over this period. Policy should ensure that UMP trickles down to SMEs regardless of their size, age or location. Tweetable line: Leveraged SMEs in stressed countries are more likely to remain credit constrained even when monetary policy is expansionary. Policy must do more to support small and young firms' access to credit to facilitate higher investment and growth. Plain English Summary: The global financial crisis which began in 2007 and the subsequent sovereign debt crisis which began in 2010 negatively affected many small- and medium-sized enterprises (SMEs) in accessing finance. Over the period 2014–2019, the ECB implemented various 'unconventional monetary policy' (UMP) tools to make it easier for companies to get loans, to boost economic growth and to bring inflation close to their 2% target. We use the ECB/EC Survey on the Access to Finance of Enterprises (SAFE) to examine the relationship between monetary policy and the ability of SMEs to access finance in countries that were most badly affected by the two crises. These are known as the 'stressed' countries and are Greece, Ireland, Italy, Portugal and Spain. We show that UMP increased the probability that firms in stressed countries with higher debt-to-assets ratio are credit constrained. However, this effect is insignificant in non-stressed countries. Additionally, we find little evidence that risky firms are credit constrained during periods of UMP, when risk is measured from the firms' viewpoint. However, smaller and younger firms—which are also seen as risky—do suffer from financial constraints. There are a number of policy implications arising from this research. First, monetary policy should operate in a manner that SMEs in all euro-area countries have similar access to bank finance. Second, monetary policy should make sure that UMP assists smaller and younger firms. Finally, public policy could also intervene to support technologies to allow access to real-time transaction flows between banks and firms to allow banks to be better informed about the risk profile of firms and allocate funds to SMEs that warrant liquidity. [ABSTRACT FROM AUTHOR]

This research analyzes the impact of bank capital, liquidity and funding liquidity on sustainable bank lending in the Middle East and North Africa (MENA) region. An unbalanced panel dataset covering 55 banks using ESG scoring criteria from 2010–2020 was employed for this purpose. Results indicate that higher capital and liquidity ratios hinder the MENA banking sector's ability to improve its sustainable lending capacity. Funding liquidity has a positive and significant effect on sustainable bank lending growth, which suggests that funding liquidity raises sustainable bank lending capacity. Furthermore, the impact of funding liquidity on sustainable bank lending growth remains positive and statistically significant to all capital ratios. It implies that bank capital improves the relationship between funding liquidity and banks' capacity to issue loans in the MENA region. Finally, the results of too-big-to-fail banks indicate that bank lending growth is positively affected by higher capital ratios. Hence, it may help them to increase their capacity to issue sustainable bank loans in the market. Overall the results are robust to principal component analysis and other estimation techniques like bootstrapped-based bias correction fixed effects. [ABSTRACT FROM AUTHOR]

How much deposits and equity a bank has influences how a banks' lending responds to monetary policy. While the responsiveness for the bank lending channel has been well established, this is not the case for the risk-taking channel (RTC). We show in a value-at-risk RTC model that the lending for banks with relatively more equity and non-interest-bearing deposits should respond less to monetary policy tightening. This suggests that non-interest-bearing deposits act as "pseudo capital." In a panel of US banks, we find strong evidence in support of our model for various risk measures. [ABSTRACT FROM AUTHOR]

In the realities of the modern domestic economy, the process of risk management of commercial banks associated to credit corporate customers, acquires new content. The assessment of what place in the company’s activity has a work that contributes to solving the most pressing problems of our time: environment, social and general corporate governance comes to the fore. As a result, the focus is on a group of lending risks known as ESG. Since the areas of work of clients — legal entities, with which these risks are associated, and described mainly by qualitative, non-formalized characteristics, a difficult task for modern bank risk-management becomes normalizing the process of their evaluation when making specific decisions on the loan. This explains the interest and relevance of this research, the object of which is the risk management subsystem for lending to corporate clients by commercial banks, the subject is the consideration of ESG factors in this process. The purpose of the paper is to develop the basics of decision-making tools in the management of bank credit risks, with this group of factors. The authors apply methods of both general scientific (induction, deduction, analysis, synthesis) and special: system and retrospective analysis of existing developments in the field of justification of decisions of bank risk management. The theoretical significance of the research results consists in a complex analysis of the role and place of ESG-risks in the overall risk landscape and the integration of environmental, social and managerial factors into credit risk assessment. Basic principles of construction of phenomenological model, used to support credit decisions by banks of corporate clients taking into account ESG-factors that influence their activity, have been developed.