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The reason for concern is the rapid decline in loans to small enterprises which is critical to their performance, compared to large businesses following the periods of banking reformations in Nigeria. Thus, the purpose of this paper is to investigate the influence of risk perception on bank lending behaviour to small enterprises. It also investigates the impact of government intervention, consolidation and recapitalization on the relationship between risk perception and bank lending behaviour to small enterprise.

This study empirically analysed (ordinary least square) secondary data obtained from the Central Bank of Nigeria Statistical Bulletins, Annual Statement of Accounts covering the period 1992–2020.

The results show that the absence of government interventions and the presence of banking reformations have statistically negative significant effect on bank lending to small enterprises. The findings challenge the argument that generally assumes risk aversion of banks towards small enterprise lending because of small enterprise’s inability to prove their credit worthiness and consequently constraining access to finance to the sector. Instead, the results and analysis from this study found theoretical support for the variation of bank behaviour in lending to small enterprises depending on the status of wealth of the financial system.

A key lesson from this study for government concerned about promoting performance of the small enterprise sector is that regulating and enforcing lending requirements on access to debt financing of the sector is necessary if constraints in access debt finance is to be eliminated. Second, while strategies such as bank consolidation, recapitalization may help strengthen and make financially robust the banking system; it places the banks in a gain position where losses looms to them than gain.

This study challenges the argument that generally assumes risk aversion of banks towards small enterprise lending as a result of inability to prove their credit worthiness and consequently constraining access to finance to the sector. Instead, the results and analysis from this study reveal a variation in lending to small enterprises and suggests that the position of the bank in relation to a reference point influences how risk is perceived by the bank and thus impacts on their risk decision-making behaviour.

This study aims to analyze bank lending behavior before and during the most recent financial crisis. Banks are more willing to grant loans during economic expansion. However, this behavior can result in reduced portfolio asset quality. The analysis tries to facilitate understanding of whether this relationship is always true. A second aim of the study is to highlight whether the impact of credit risk on bank lending behavior during a financial crisis is greater for banks that grew faster during the pre-crisis period than for other banks.

The analysis is based on a sample of banks in Italy, an example of a country undergoing a credit crunch without a lending bubble burst. The methodology is based on a panel regression and author uses different models to test his hypothesis: an ordinary least squares, a fixed effect, a least absolute regression and a Generalized Method of Momentum (GMM). This allows to mitigate some of the endogeneity problems.

The essay shows that effectively, most of the banks that grew faster during a pre-crisis period show a higher growth of non-performing loans and a greater reduction in lending activity during a financial crisis. However, 34 per cent of banks that grew faster during a pre-crisis period have a low growth of non-performing loans in the subsequent years. Finally, the results suggest that credit risk negatively affects bank lending behavior, but a higher impact relative to fast banks with respect to other banks cannot be emphasized.

Findings have some policy implications. First, given the adverse effect of the increase of non-performing loans (NPLs) on the bank’s lending activity and on the broad economy in general, there is merit to strengthen supervision to prevent a further increase and accumulation of NPLs in the bank’s credit portfolio. In addition, the supervisors could require that banks take always high credit standard when extend credit, both during positive economic cycle and during period of contraction. The using of higher credit standard could be helpful in the reduction of the pro-cyclicality of bank’s lending behavior and credit risk. Furthermore, the fact that high level of NPLs continues to impact on the bank’s lending activity and that this activity is very important for the economic recovery underlines that banks should clean-up their credit portfolios as soon as possible.

This paper contributes to the literature in various ways. The study analyzes the cyclical effect of credit growth, i.e. banks increase their bank lending behavior during good times, which leads to an increase in bad loans and a high credit risk in their portfolio. These cyclical effects are not knowingly studied together, but the literature usually analyzes the single steps of the cycle. Second, studying listed and unlisted banks allows to have a more representative sample and to analyze better the real bank lending activity considering both commercial than cooperative banks.

The purpose of this paper is to check if there is a procyclical lending behaviour in dual banking systems of the Golf Cooperation Council (GCC) countries. The study also tries to control for the role of Islamic banks in amplifying or mitigating the procyclicality of dual banking systems.

Estimation of a dynamic panel model using annual observations on a sample of 81 banks based in the GCC countries between 2005 and 2018. The study uses two business cycle indicators as dependent variables, namely, output gap and oil price gap.

The system generalilzed method of moments (GMM) estimator and robustness checks confirm the procyclical lending pattern of dual banking systems in the GCC. Estimation outputs also indicate that this procyclicality is more pronounced during economic slowdowns. However, it is found that Islamic banks’ lending is less procyclical, giving support for the stability view of Islamic banking systems. The authors think that the implementation and conduct of macroprudential policies are very challenging for banking authorities when Islamic banks and conventional banks operate under the same regulatory framework.

The research paper may suffer from some limitations. Indeed, exploring panel data instead of country-case data may lead to a problem of heterogeneity that may underpin the credibility of the econometrical estimations. To deal with this problem by introducing a set of bank-specific and time-specific dummies. Furthermore, small N samples (N = number of individuals) may affect the reliability of the tests for the validity of instruments and autocorrelation used under the GMM estimator, leading to inefficient results. Consequently, the number of selected banks is extended as much as possible (81 banks), becoming important comparing to the time dimension of the panel.

Policymakers and regulators are incited to embed the perspectives of Islamic finance regarding lending cyclicality in dual banking systems, which promote the efficiency of resource allocation to the financing of assets and by consequence enabling financial stability. The stability view of the Islamic banking system could prompt policymakers and regulators to encourage the implementation and development of Islamic banks.

The present paper tries to overcome the lack of empirical studies on the procyclicality of dual banking. The study contributes to this novel literature in two ways. First, it focuses exclusively on GCC banking systems. In fact, compared to other emerging markets, business cycles characterizing GCC are specific because of the role played by the oil and gas revenues in the economic growth and financial system is crucial. Second, this paper brings into evidence the procyclicality of GCC banking systems also when the oil price is taken as a business cycle indicator.

The purpose of this paper is to theoretically and empirically examine the lending behavior of Vietnamese banks.

A firm-banking model was established, considering risk-taking behavior and the regulatory environment. Based on the theoretical model, a simultaneous equation system was specified that considered loan growth and deposit growth as endogenous variables to empirically investigate lending behavior in Vietnam’s banking sector. Two-stage least square estimators were employed using a micro-level panel data set comprising 39 Vietnamese commercial banks.

The empirical results demonstrate the divergence in the lending behavior of private and state-owned banks. The regressions results support the predictions of the theoretical model on the positive effect of economic growth and the negative effect of the government bond rate on bank lending. The results also suggest that deposit growth and liquidity constraint significantly influence loan supply in private banks, while equity growth is the determinant of lending behavior in state-owned banks. Nevertheless, the banks’ non-performing loan rate, which proxies for the expected default probability of loans, is found to not significantly affect loan supply.

Despite the efforts to capture the idiosyncratic characteristics of the Vietnamese banking system, this study does not fully take into account distinctive nature of the Vietnamese banking system.

The paper suggests implications for the government monetary policy.

The contribution of this paper is twofold. First, it introduces a firm-banking theoretical model that allows banks offering different lending rates and modeled under different aspects of modern banking such as risk-taking behavior and regulatory environment. Second, it is a very first study empirically investigating the lending behavior of Vietnamese banks.

While poverty alleviation is the first core goal of Sustainable Development Goals (SDGs), and microfinance institutions (MFIs) are considered important instruments for poverty alleviation in developing countries as they provide credit access to the poor, there is surprisingly little evidence of the drivers of the lending behavior of microfinance institutions. Hence, the purpose of this study is to identify the factors that influence the credit growth of MFIs in Sub-Saharan Africa (SSA).

The study relies on unbalanced panel dataset of 130 MFIs operating across 31 countries in SSA during the period 2004–2014 constituting 546 useable observations. The study uses the Arellano-Bover/Blundell-Bond two-step generalized method of moments (GMM) Windmeijer bias-corrected standard errors to estimate the models.

The results confirm that while capitalization, liquidity and size are positively associated with credit growth, profitability negatively impacts credit growth; whereas, other MFI specific factors namely portfolio quality, deposit growth and nondeposit borrowing growth have little direct effects on MFI credit growth. The results also show that MFI credit growth is pro-cyclical but negatively related to GDP per capita consistent with the theory of convergence. On the other hand, inflation and employment are not important covariates in the credit growth of MFIs.

The findings suggest that if MFIs improve their liquidity and size by attracting more deposits and nondeposit borrowings, among others, they can increase credit access to the poor. Moreover, since the lending behavior of MFIs is not resilient to GDP shocks, different measures are needed to increase the financial stability of the microfinance industry. In this respect, since MFI capitalization is positively associated with credit growth and MFI credit growth is pro-cyclical, the findings provide useful insights to central banks/regulatory authorities and the Basel Committee as to the need for a counter-cyclical capital buffer requirement in the microfinance industry.

The study is the first comprehensive study to examine the drivers of MFI lending behavior as an extension to lending behavior models from the banking industry.

The purpose of this study is to investigate the impact of religiosity on banks’ lending behavior during the COVID-19 pandemic in the USA.

This study uses the evidence from the issuance of Paycheck Protection Program (PPP) loans to relate local religiosity to banks’ participation in the PPP loan program and to banks’ loan portfolio performance during the pandemic.

The results of this study show that banks located in more religious counties have a higher level of lending through the PPP, supporting the ethical and moral concerns cultivated by local religious beliefs. In addition, banks’ lending before the pandemic is more prudential in more religious areas, as reflected in lower losses and higher returns at the onset of the crisis, especially in areas where business activities were most disrupted, supporting the stewardship role encouraged by religiosity.

Thanks to the structure of the PPP loans programs, the authors are able to disentangle the conflicting effects of morality and prudence on banks’ behavior.

The role of banks to efficiently allocate loans to borrowers is fundamental to a thriving economy. In South Africa this is particularly important, given a challenging socio-economic environment with high levels of unemployment and poor levels of economic growth. This paper investigates the short- and long-run determinants of bank lending behaviour for South African banks.

The study design uses time-series data in an autoregressive distributed-lagged model for the period 1994–2016.

The results indicate that factors such as the volume of deposits and the size of a bank are central to explaining bank lending behaviour in the short run, whereas GDP was found to be the only factor explaining lending behaviour in the long run.

The results suggest that the regulatory role of the South African Reserve Bank to ensure financial stability instils trust and certainty in the banking industry and is reflected in the short-run implications to ensure that large banks are stable and depositors avoid a run on a bank's deposits. This is particularly relevant if the long-run trajectory of the economy is one of sustainable economic growth. Furthermore, although the reserve bank is constantly under threat of not having a pro-growth policy agenda, the results support its role to promote confidence and trust through its financial stability policy. Should confidence in the financisal system not be present, it is argued that systemic risk will be exacerbated through the potential failure of large banks and depositors withdrawing their funds through a run on the bank in the short run. Where financial stability is present, market participants will be more inclined to make deposits into the large South African banks, given the trust and certainty within the system.

The purpose of this paper is to examine the lending behavior of women-owned cooperatives (WoCs) by exploiting the natural experiment of the financial crisis, employing a novel data set of Indian cooperative banks during 2004–2013.

In view of the longitudinal nature of the data, the authors employ panel data techniques for the purposes of analysis.

The findings indicate that WoC banks increased lending to both agriculture and small-scale industries, especially in high-income states. Further disaggregation reveals that the possible weaknesses in asset quality from lending to these sectors in low-income states could be driving the results.

To the best of our knowledge, this is one of the earliest studies for a leading emerging economy to empirically investigate the behavior of WoC banks and relatedly, how their behavior evolved during the financial crisis.

Following the recent global financial crisis, US regulatory agencies issued laws to implement the Basel III accords to ensure the resiliency of the US banking sector. Theories predict that enhanced regulations may alter credit issuance of the regulated banks due to increased capital requirements, but the direction of changes might not be straightforward especially with respect to the agricultural loans. A decrease in credit availability from banks might pose a serious problem for farmers who rely on bank credit especially during economic recessions. The paper aims to discuss these issues.

In this study, the impact of Basel III regulatory framework implementation on agricultural lending in the USA is examined. Using panel data of FDIC-insured banks from 2008 to 2017, the agricultural loan volume and growth rates are examined for agricultural banks and all US banks.

The results show that agricultural loan growth rates have slowed down, but the amount of agricultural loan volume issuance still remained positive. More detailed examination finds that regulated agricultural banks have decreased both the agricultural loan volume and their loan exposure to the agricultural sector, showing a possible sign of credit crunch.

This study examines whether the implementation of the Basel III regulation has resulted in changes in agricultural loan issuance by US banks as predicted by the lending channel theory.