Economics at your fingertips  

Bank Lending Behavior during Global Financial Crisis

Vighneswara Swamy () and S. Sreejesh

Applied Economics Quarterly (formerly: Konjunkturpolitik), 2013, vol. 59, issue 4, 311-329

Abstract: We investigate an emerging economy's bank lending behavior during the global financial crisis and provide answers as to what causes the inert bank lending during the periods of crisis. By employing cointegration technique, we show that bank lending has a significant positive relationship with the borrowing activity of the banks and, in contrast, an inverse relationship with investment activity during the financial crisis. Indian banks were not exposed to subprime related assets, and hence the crisis after Lehman could be regarded as an exogenous liquidity shock. We observe that following the liquidity shock owing to the crisis, banks' lending schedules became considerably steeper, suggesting that the bank-lending channel of traditional monetary policy may not have been working during the crisis period.

Keywords: time-series models; financial markets; interest rates; bank lending; financial crisis (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link) (application/pdf)
Access to full text is restricted to subscribers (2008 onwards); Pay-per-view access from or from (2006 onwards with 2 years moving wall)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.duncker-h ... nomicsquarterly.html

Access Statistics for this article

Applied Economics Quarterly (formerly: Konjunkturpolitik) is currently edited by Ansgar Belke, Uwe Sunde and Winfried Koeniger

More articles in Applied Economics Quarterly (formerly: Konjunkturpolitik) from Duncker & Humblot, Berlin
Bibliographic data for series maintained by Deborah Anne Bowen ().

Page updated 2022-05-09
Handle: RePEc:aeq:aeqaeq:v59_y2013_i4_q4_p311-329