Work

Capital, funding liquidity, and bank lending in emerging economies: An application of the LSDVC approach

Year: 2018

Type: article

Abstract: The paper examines the effect of funding liquidity on bank loan growth using a dynamic least squares dummy variable corrected (LSDVC) approach over the period between 2006 and 2015. The empirical results reveal that funding liquidity is negative and significant, which suggests that higher funding liquidity reduces bank loan growth. In addition, bank lending improves when bank capital increases and the reduction effect of funding liquidity on bank lending varies with capital. These findings remain robust to an alternative estimator. The study provides implications for policymakers to understand the role of funding liquidity in bank lending.

Source: Borsa Istanbul Review

DOI: 10.1016/j.bir.2018.08.002

Authors: A.M. Dahir, F. Mahat, N.H.A. Razak, A.N. Bany-Ariffin

Institution: Universiti Putra Malaysia

Language: English

Topic: Banking stability, regulation, efficiency

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: gold

Estimated APC paid: $1,500