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Effects of COVID‐19 support measures on bank lending: Lessons from the release of countercyclical capital buffer and loan guarantee schemes in Hong Kong

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  • Eric Wong
  • Kelvin Ho
  • Andrew Wong
  • Vincent Pok Ho Lo

Abstract

Based on a panel of banks in Hong Kong, we found that banks with a relatively thin capital buffer and liquidity before the pandemic may constrain their post‐pandemic loan growth. We further found strong evidence that the release of countercyclical capital buffer (CCyB) requirements amid the pandemic mitigated the capital constraint to support continued provision of bank credit to the real economy, but mainly to non‐hard hit economic sectors. Nevertheless, the credit flow to hard‐hit economic sectors is found to be well supported by the SME Financing Guarantee Scheme.

Suggested Citation

  • Eric Wong & Kelvin Ho & Andrew Wong & Vincent Pok Ho Lo, 2024. "Effects of COVID‐19 support measures on bank lending: Lessons from the release of countercyclical capital buffer and loan guarantee schemes in Hong Kong," Pacific Economic Review, Wiley Blackwell, vol. 29(3), pages 299-327, August.
    • Handle: RePEc:bla:pacecr:v:29:y:2024:i:3:p:299-327
    DOI: 10.1111/1468-0106.12444
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    References listed on IDEAS

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    5. Falagiarda, Matteo & Prapiestis, Algirdas & Rancoita, Elena, 2020. "Public loan guarantees and bank lending in the COVID-19 period," Economic Bulletin Boxes, European Central Bank, vol. 6.
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