Disentangling the effect of supply and demand factors on bank lending. Evidence from Bank Lending Survey in Azerbaijan

Ilkin Huseynov (), Zubeyda Imanova and Hikmat Valirzayev ()
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Ilkin Huseynov: Central Bank of Azerbaijan Republic
Hikmat Valirzayev: Central Bank of Azerbaijan Republic

No 2102, Working Papers from Central Bank of Azerbaijan Republic

Abstract: This paper examines the role of supply and demand conditions in bank lending using data from the Bank Lending Survey (BLS) in Azerbaijan. Results suggest that both supply and demand factors play an important role in credit growth rate. The estimated impact of softening in credit conditions on the quarter-on-quarter consumer lending growth rate ranges between 0.14 and 0.21 percentage points while the effect of the decrease in demand is found to range between -0.24 and -0.34 percentage points, depending on the specifications. Results remain to be robust to the introduction of various control variables, time dummies, and different specifications. We further compare results for systematically important (SI) banks and others (NSI) and find that the effect is asymmetric for different bank groups.

Keywords: Bank Lending Survey; panel data; credit growth; supply tightening (search for similar items in EconPapers)
JEL-codes: E30 E32 E52 G21 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2021-08-18
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Persistent link: https://EconPapers.repec.org/RePEc:aze:wpaper:2102

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