Determinants of Bank Credit in Small Open Economies: The Case of Six Pacific Island Countries

16 Pages Posted: 13 Dec 2012

See all articles by Parmendra Sharma

Parmendra Sharma

Griffith University

Neelesh Gounder

University of the South Pacific - Department of Economics; Griffith University - Department of Accounting, Finance and Economics

Date Written: December 11, 2012

Abstract

This paper examines the changes in bank credit to private sector across six economies in the South Pacific. An extensive time-series and cross-country panel data allow us to draw new and broader lessons compared to existing research, which have tended to focus mostly on single countries with shorter time periods. Results show that rising average lending and inflation rates may be detrimental to credit growth, and that deposit and asset size contribute positively to credit growth. Results also indicate that stronger economic growth leads to higher credit growth. A number of policy implications emerge and are also discussed.

Keywords: bank private sector credit, South Pacific, cross–country analysis

JEL Classification: G21, E44, E51, C23

Suggested Citation

Sharma, Parmendra and Gounder, Neelesh, Determinants of Bank Credit in Small Open Economies: The Case of Six Pacific Island Countries (December 11, 2012). Available at SSRN: https://ssrn.com/abstract=2187772 or http://dx.doi.org/10.2139/ssrn.2187772

Parmendra Sharma (Contact Author)

Griffith University ( email )

Department of Accounting Finance and Economics
Griffith business School
Brisbane, Queensland QLD 4111
Australia

Neelesh Gounder

University of the South Pacific - Department of Economics ( email )

Private Bag, Laucala Campus
Suva
Fiji

Griffith University - Department of Accounting, Finance and Economics ( email )

Parklands Drive
Brisbane, Queensland QLD 4215
Australia

HOME PAGE: http://www.fijianeconomy.com

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