Bank Lending Standards, Loan Demand, and the Macroeconomy: Evidence from the Korean Bank Loan Other Survey

Sangyup Choi

No GRU_2020_006, GRU Working Paper Series from City University of Hong Kong, Department of Economics and Finance, Global Research Unit

Abstract: Using the bank loan officer surveys from 12 countries, we document a novel cyclical pattern found in bank lending standards and loan demand, which differs between market-based and bank-based economies; in particular, the lending rate fails to reflect the credit market conditions in bank-based economies. Using the Korean economy as an example, we demonstrate the failure of identification of loan supply shocks when relying on the lending rate and propose novel identifying schemes by exploiting the information from the survey. Our findings suggest that disentangling the supply and demand factors of credit shocks is crucial to understand their macroeconomic effects.

Keywords: Bank loan officer survey; Sign-restriction VARs; Bank lending shocks; Credit market disequilibrium; Bank-based economies (search for similar items in EconPapers)
JEL-codes: E32 E44 E51 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2020-04-12
New Economics Papers: this item is included in nep-ban, nep-fdg, nep-mac and nep-mon
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:cth:wpaper:gru_2020_006

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