 Credit market regulations and bank loan pricing11The authors thank the Editor and two anonymous referees for their insightful comments and suggestionsThanh Cong Nguyen and Thuy Tien Ho Economic Modelling, 2024, vol. 133, issue C Abstract: While loan pricing is a crucial factor determining economic growth, the literature lacks evidence on the impact of credit market regulations on loan prices. Using a panel of 139 economies from 2002 to 2020, we find that liberalising credit regulations, particularly credit to the private sector and the controls of interest rates, reduces the cost of bank loans. Bank ownership does not reveal itself as an important driver of loan prices. Delving into the mechanisms behind our findings, we find that liberalising credit market regulations reduces liquidity shortage, economic uncertainty, as well as economic risk, which enables banks to charge lower on loans because they face lower downside risks. Our empirical findings offer important policy implications to policymakers, especially those in emerging/developing countries because the impact of credit market regulations on loan prices is more pronounced in those economies. Keywords: Credit regulations; Loan prices; Bank ownership; Private sector credit; Interest rate controls (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:133:y:2024:i:c:s0264999324000294 DOI: 10.1016/j.econmod.2024.106673 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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