The Impact of COVID-19 Pandemic on Bank Lending Around the World
53 Pages Posted: 18 Oct 2020 Last revised: 5 Jun 2021
Date Written: October 15, 2020
We evaluate the influence of the pandemic on global bank lending and identify bank and country characteristics that amplify or weaken the effect of the disease outbreak on bank credit. Using a difference-in-difference methodology and banks from 125 countries, we find that bank lending is weaker in countries more affected by the health crisis. This effect depends on bank financial condition, market structure, regulation and supervision of banking systems, financial intermediary and debt market development, strength of the institutional environment, ease of access of corporate firms to debt capital, and the response of the public health sector to the crisis.
Keywords: Bank loans; credit supply; COVID-19; difference-in-difference; entropy balancing
JEL Classification: G15; G21; G28; G35; F33
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