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Determinants of Bank Long-term Lending Behavior: Evidence from Russia

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Listed:
  • Lucy Chernykh

    (Bowling Green State University, USA)

  • Alexandra K. Theodossiou

    (Texas A&M University, Corpus Christi, USA)

Abstract

We investigate the determinants of the banks' propensity to make long-term business loans in an emerging market context. Using a large sample of Russian banks, we find that the median bank allocates only 0.5% of its assets in long-term business loans and that there is wide cross-sectional variation in this ratio among banks. A bank's ability to extend long-term business loans depends on its size, capitalization, and the availability of long-term liabilities rather than its type of ownership. These results highlight the importance of bank-level (supply side) constraints in extending vital long-term credit to firms.

Suggested Citation

  • Lucy Chernykh & Alexandra K. Theodossiou, 2011. "Determinants of Bank Long-term Lending Behavior: Evidence from Russia," Multinational Finance Journal, Multinational Finance Journal, vol. 15(3-4), pages 193-216, September.
    • Handle: RePEc:mfj:journl:v:15:y:2011:i:3-4:p:193-216
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    References listed on IDEAS

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    Cited by:

    1. Nataliya G. Filatova, 2019. "Improving the Credit Rating of Loan Recipients Implementing Long-Term Investment Projects," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 4, pages 102-115, August.
    2. Vernikov, Andrei, 2017. "Структурные Или Институциональные Сдвиги? Попытка Измерения На Примере Банковского Сектора [Structural change, institutional change and their measurement: The case of banking]," MPRA Paper 79978, University Library of Munich, Germany.
    3. Theodossiou, Alexandra K. & Theodossiou, Panayiotis, 2014. "Stock return outliers and beta estimation: The case of U.S. pharmaceutical companies," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 30(C), pages 153-171.
    4. Alamsyah, Janoearto & Masih, Mansur, 2017. "Impact of islamic money market development on islamic bank liquidity management: a case study of Indonesia," MPRA Paper 106778, University Library of Munich, Germany.
    5. Lev Fomin, 2019. "Do Higher Interest Rates on Loans and Deposits and Advertising Spending Cuts Forecast Bank Failures? Evidence from Russia," Russian Journal of Money and Finance, Bank of Russia, vol. 78(2), pages 94-112, June.
    6. Nur Setyowati, 2019. "Macroeconomic Determinants of Islamic Banking Products in Indonesia," Economies, MDPI, vol. 7(2), pages 1-15, June.
    7. Imran, Kashif & Nishat, Mohammed, 2013. "Determinants of bank credit in Pakistan: A supply side approach," Economic Modelling, Elsevier, vol. 35(C), pages 384-390.
    8. Seho, Mirzet & Alaaabed, Alaa & Masih, Mansur, 2016. "Risk-Sharing Financing of Islamic Banks: Better Shielded Against Interest Rate Risk?," MPRA Paper 82558, University Library of Munich, Germany.
    9. Ramic, Esma & Masih, Mansur, 2017. "Is islamic bank financing related to interest rate ? Malaysian evidence based on ARDL approach," MPRA Paper 107163, University Library of Munich, Germany.
    10. Alexander Karminsky & Alexander Kostrov, 2014. "The probability of default in Russian banking," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 4(1), pages 81-98, June.
    11. Seho, Mirzet & Masih, Mansur, 2015. "Risk sharing financing of Islamic banks: interest free or interest based?," MPRA Paper 65230, University Library of Munich, Germany.
    12. Alexander Karminsky & Alexander Kostrov & Taras Murzenkov, 2012. "Comparison of default probability models: Russian experience," HSE Working papers WP BRP 06/FE/2012, National Research University Higher School of Economics.
    13. Karumba, Mary & Wafula, Martin, 2012. "Collateral lending: Are there alternatives for the Kenyan banking industry?," KBA Centre for Research on Financial Markets and Policy Working Paper Series 3, Kenya Bankers Association (KBA).
    14. Karminsky, A. & Kostrov, A., 2013. "Modeling the Default Probabilities of Russian Banks: Extended Abillities," Journal of the New Economic Association, New Economic Association, vol. 17(1), pages 64-86.
    15. Vernikov, Andrei & Mamonov, Mikhail, 2017. "Долгосрочное Банковское Кредитование: Какие Банки Им Занимаются И Почему? [Which banks and why lend long-term in Russia?]," MPRA Paper 77160, University Library of Munich, Germany.

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    More about this item

    Keywords

    emerging market banking; long-term business loans; Russia;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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