Bank Ownership and Credit Over the Business Cycle: Is Lending by State Banks Less Procyclical?

By Ata Can Bertay, Asli Demirgüç-Kunt, Harry Huizinga. 2012

311 citations recorded by the source corpus.

This paper finds that lending by state banks is less procyclical than lending by private banks, especially in countries with good governance. Lending by state banks in high-income countries is even countercyclical. On the liability side, state banks expand potentially unstable non-deposit liabilities relatively little during booms, especially in countries with good governance. Public banks also report loan non-performance more evenly over the business cycle. Overall the results of the analysis suggest that state banks can play a useful role in stabilizing credit over the business cycle as well as during periods of financial instability. However, the track record of state banks in credit allocation remains quite poor, questioning the wisdom of using state banks as a short-term countercyclical tool.

Subfields: Accounting, Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/aa185420ecfcac2ef080b8df923bf59a7e3533d1

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

1. Eeva Kerola
2. Reggy Hooghiemstra
3. Paula M. G. van Veen-Dirks
4. G. Ferri
5. Panu Kalmi
6. Ronny Prabowo

In Economics and Econometrics

1. Eeva Kerola
2. Reggy Hooghiemstra
3. Paula M. G. van Veen-Dirks
4. G. Ferri
5. Panu Kalmi
6. Ronny Prabowo

In Finance

1. Eeva Kerola
2. Reggy Hooghiemstra
3. Paula M. G. van Veen-Dirks
4. G. Ferri
5. Panu Kalmi
6. Ronny Prabowo

Citations in the corpus

• Does bank ownership affect lending behavior? Evidence from the Euro area (2014, methodology): “Using their model as a basis, and following more recent empirical studies (see e.g. Gambacorta (2005), Gambacorta and Mistrulli (2004), Bertay et al. (2012)) we write an autoregressive model, but deviating from existing literature we test whether interest rate changes affect differently banks of…”
• State Ownership, Socio-political Factors, and Labor Cost Stickiness (2018, methodology): “In line with Bertay et al. (2015), we use a measure of government effectiveness from Worldwide Governance Indicators to represent GoftEff (Kaufmann & Kraay, 2014).”