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Capital Constraints and the Credit Structure of Commercial Banks: Evidence from China

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  • Junxun Dai

    (Department of Finance, Wuhan University, China)

Abstract

This study focuses on the impact of capital constraints on the credit structure of commercial banks. Through theoretical modeling and optimization process, this study draws the conclusions that large-sized banks would grant more loans to large-sized enterprises and fewer loans to small-sized enterprises under capital constraints, but small-sized banks would grant more loans to large-sized enterprises just under the liberalization of interest rates and capital constraints. This study also makes empirical tests using the 2002-2012 yearly panel data from commercial banks in China and panel estimations with SYS-GMM to examine the changes in the credit structures of commercial banks under capital constraints. The evidence from China indicate that the estimated impact of capital constraints on the change i

Suggested Citation

  • Junxun Dai, 2013. "Capital Constraints and the Credit Structure of Commercial Banks: Evidence from China," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 109-123, December.
    • Handle: RePEc:rjr:romjef:v::y:2013:i:4:p:109-123
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    References listed on IDEAS

    as
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    3. Jiménez, Gabriel & Ongena, Steven & Peydró, José-Luis & Saurina, Jesús, 2010. "Credit supply - Identifying balance-sheet channels with loan applications and granted loans," Working Paper Series 1179, European Central Bank.
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    5. Ugo Albertazzi & Domenico J. Marchetti, 2010. "Credit supply, flight to quality and evergreening: an analysis of bank-firm relationships after Lehman," Temi di discussione (Economic working papers) 756, Bank of Italy, Economic Research and International Relations Area.
    6. Hancock, Diana & Laing, Andrew J. & Wilcox, James A., 1995. "Bank capital shocks: Dynamic effects on securities, loans, and capital," Journal of Banking & Finance, Elsevier, vol. 19(3-4), pages 661-677, June.
    7. Li Ma & Junxun Dai & Xian Huang, 2011. "Effect of capital constraints on risk preference behavior of commercial banks," China Finance Review International, Emerald Group Publishing Limited, vol. 1(2), pages 168-186, January.
    8. Hancock, Diana & Wilcox James A., 1993. "Has There Been a Capital Crunch in Banking? The Effects on Bank Lending of Real Estate Market Conditions and Bank Capital Shortfalls," Journal of Housing Economics, Elsevier, vol. 3(1), pages 31-50, December.
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    Cited by:

    1. Cristian ANGHEL, 2019. "Risk management associated with the interbank relationships," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(3(620), A), pages 87-98, Autumn.

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    More about this item

    Keywords

    credit structure; capital constraints; Basel Accord; SYS-GMM; commercial banks;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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