Year: 2013
Author: Swamy, Vighneswara, Sreejesh, S.
Applied Economics Quarterly, Vol. 59 (2013), Iss. 4 : pp. 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.
JEL Classification: C22, D53, E43, E51, G21
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Journal Article Details
Publisher Name: Global Science Press
Language: English
DOI: https://doi.org/10.3790/aeq.59.4.311
Applied Economics Quarterly, Vol. 59 (2013), Iss. 4 : pp. 311–329
Published online: 2013-12
AMS Subject Headings: Duncker & Humblot
Copyright: COPYRIGHT: © Global Science Press
Pages: 19
Author Details
| Section Title | Page | Action | Price |
|---|---|---|---|
| Vighneswara Swamy and S. Sreejesh: Bank Lending Behavior during Global Financial Crisis | 311 |