Determinants of Bank Long-Term Lending Behavior: Evidence from Russia
24 Pages Posted: 25 Jun 2015
Date Written: June 25, 2015
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.
Keywords: emerging market banking; long-term business loans; Russia
JEL Classification: G21, O16
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