Time to Extend Credit? Bank Credit Lines During the COVID-19 Pandemic in Russia

Maria Semenova and Polina Popova ()
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Polina Popova: Center for Institutional Studies, HSE University

Russian Journal of Money and Finance, 2023, vol. 82, issue 2, 106-119

Abstract: This study focuses on the effect the COVID-19 pandemic had on the drawdown of bank credit lines in Russia. Using bank-level data for all Russian banks for 2017-2020, we document that the first quarter of the pandemic saw a significant increase in the probability that banks have positive granted credit lines, which - given that banks do not tend to extend credit limits at the beginning of an economic crisis - could be a signal that borrowers drew down funds within existing credit limits where possible, increasing the overall credit risk of the banking sector. The following quarters showed a gradual decrease in the inability of pre-pandemic models to estimate the probability that lines of credit would be granted, meaning that the banks adapted to the new economic reality. This is the first study examining the COVID-19 shock on credit line drawdowns using publicly available bank-level data.

Keywords: bank; credit line; Russia; COVID-19 (search for similar items in EconPapers)
JEL-codes: G21 O16 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:bkr:journl:v:82:y:2023:i:2:p:106-119

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