scholarly journals The Effects of Bank-Level and Macroeconomic Variables on Commercial Bank Lending Based on Type of Use

2021 ◽  
Vol 24 (1) ◽  
pp. 105
Author(s):  
Arintoko Arintoko
Keyword(s):  
Interest Rates ◽  
Bank Lending ◽  
Bank Loans ◽  
Capital Adequacy ◽  
Working Capital ◽  
Macroeconomic Variables ◽  
Distributed Lag ◽  
Real Gdp ◽  
Long Run ◽  
Lending Behavior

ABSTRACTThe purpose of this study was to analyze the effect of interest rates, bank-level and macroeconomic variables on bank lending based on the type of use. The analysis method uses an autoregressive distributed lag (ARDL) model with quarterly data for the period of 2011Q1 - 2020Q1. The results show that investment lending behavior can be explained well by all bank-level and macroeconomic variables for the long run. The bank-level variable also reflects the performance and soundness of the bank, namely the capital adequacy ratio and loan to deposit ratio. Meanwhile, macroeconomic variables include inflation and real GDP. Consumer lending behavior is better explained by macroeconomic variables than bank-level variables. Meanwhile, GDP is the only variable that has a significant effect on working capital loans, which means that the behavior of working capital loans is more influenced by the business cycle as indicated by changes in real GDP. GDP is the only variable that consistently has a significant positive effect on bank loans for the three types of loans. Banks need to continue to emphasize the principle of prudence in providing credit by taking into account the term and credit risk, as well as internal and external factors.

scholarly journals On the Dynamic Relationship between U.S. Farm Income and Macroeconomic Variables

2009 ◽  
Vol 41 (2) ◽  
pp. 521-528 ◽  
Author(s):  
Jungho Baek ◽  
Won W. Koo
Keyword(s):  
Interest Rates ◽  
Commodity Prices ◽  
Commodity Price ◽  
Farm Income ◽  
Agricultural Commodity ◽  
Macroeconomic Variables ◽  
Distributed Lag ◽  
Dynamic Relationship ◽  
Long Run ◽  
Short Run

This study examines the short- and long-run effects of changes in macroeconomic variables—agricultural commodity prices, interest rates and exchange rates—on the U.S. farm income. For this purpose, we adopt an autoregressive distributed lag (ARDL) approach to cointegration with quarterly data for 1989–2008. Results show that the exchange rate plays a crucial role in determining the long-ran behavior of U.S. farm income, but has little effect in the short-run. We also find that the commodity price and interest rate have been significant determinants of U.S. farm income in both the short- and long-run over the past two decades.

scholarly journals Pengaruh Tingkat Suku Bunga, Nilai Tukar Rupiah dan Jumlah Ekspor Terhadap Tingkat Kredit PERBANKAN

2008 ◽  
Vol 1 (1) ◽  
pp. 166-192
Author(s):  
Yoda Ditria ◽  
Jenni Vivian ◽  
Indra Widjaja
Keyword(s):  
Exchange Rates ◽  
Interest Rates ◽  
Economic Condition ◽  
Financial Institution ◽  
Bank Loans ◽  
Working Capital ◽  
Macroeconomic Variables ◽  
The Public ◽  
Systemic Risks ◽  
Economic Volatility

Interest rates level, exchange rates value and the export quantity are the variables of macroeconomy that always change according to the economic condition of a nation. A good knowledge about the effect of these three variables towards the amount of lending by banks, which consists of three kinds: working capital loan, investment loan, and consumption loan, will help banks’ strategic plan to face the economic volatility. Bank is a financial institution that serves as a bridge between parties that have excess funds with parties that need some funds. Banks are expected to provide loans to the public to sustain economic growth with prudence to reduce the risks, which can be customer risks or systemic risks. The goal of this research is to study the effects and relationship between interest rates level, exchange rates movement, and export quantity towards the credit level of banks and also the three kinds of bank loans, which are the working capital loan, investment loan and consumer loan using historical data from Quarter I 2002 to Quarter III 2007. The result of research indicates that the macroeconomic variables above affect the amount of lending and the three kinds of loan: working capital loan, investment loan and consumer loan. The result also shows that although the three macroeconomic variables have the same influence towards the three kinds of loan, the magnitude of the influence towards each kind of loan is different, in which the investment loan has a big influence towards the interest rates level change, working capital loan has a big influence towards the export quantity and exchange rates, and consumer loan has a moderate influence towards the variation of the three macroeconomic variables. 

scholarly journals Mobile Money Use: The Impact of Macroeconomic Policy and Regulation

Economies ◽  
2021 ◽  
Vol 9 (2) ◽  
pp. 51
Author(s):  
Lorna Katusiime
Keyword(s):  
Exchange Rate ◽  
Interest Rates ◽  
Financial Innovation ◽  
Macroeconomic Policy ◽  
Mobile Money ◽  
Distributed Lag ◽  
Distributed Lag Model ◽  
Long Run ◽  
Short Run ◽  
The Impact

This paper examines the effects of macroeconomic policy and regulatory environment on mobile money usage. Specifically, we develop an autoregressive distributed lag model to investigate the effect of key macroeconomic variables and mobile money tax on mobile money usage in Uganda. Using monthly data spanning the period March 2009 to September 2020, we find that in the short run, mobile money usage is positively affected by inflation while financial innovation, exchange rate, interest rates and mobile money tax negatively affect mobile money usage in Uganda. In the long run, mobile money usage is positively affected by economic activity, inflation and the COVID-19 pandemic crisis while mobile money customer balances, interest rate, exchange rate, financial innovation and mobile money tax negatively affect mobile money usage.

scholarly journals Do Migrant Remittances Spur Financial Development in Pakistan?evidence From Linear and Nonlinear Ardl Approach

2020 ◽  
Vol 5 (4) ◽  
Author(s):  
Muhammad Faheem ◽  
Azali Mohamed ◽  
Fatima Farooq ◽  
Sajid Ali
Keyword(s):  
Financial Development ◽  
Asymmetric Effect ◽  
Distributed Lag ◽  
Nonlinear Ardl ◽  
Real Gdp ◽  
Long Run ◽  
Potential Gain ◽  
Ardl Approach ◽  
Migrant Remittances ◽  
Bound Test

The study asseses the influence of  migrant remittances on financial development over the period of 1976-2018 in Pakistan. This study has applied the linear autoregressive distributive lag (ARDL) model and nonlinear autoregressie distributed lag (NARDL) model to check the symmetric and asymmetric effect of remittances. Results of the ARDL and NARDL bound test confirm remittances, FDI, real GDP and inflation significantly contributing to financial development. The outcomes of ARDL and NARDL have also confirmed the significant positive effect of  migrant remittances on financial development in long-run. The asymmetric ARDL  results show the existence of remittances nonlinear effect  on financial development. Specifically, the study found remittances decrease have a significant impact while remittances increase have no any significant effect on financial development. Based on findings, this study recommends the plan for the policymakers of recipient countries, especially Pakistan, could harvest the potential gain of migrant remittances though positive asymmetric association with financial sector development.

Slowdown in Bank Credit Growth: Aggregate Demand or Bank Non-performing Assets?

2018 ◽  
Vol 12 (3) ◽  
pp. 257-275 ◽  
Author(s):  
Ashima Goyal ◽  
Akhilesh Verma
Keyword(s):  
Interest Rates ◽  
Aggregate Demand ◽  
Balance Sheet ◽  
Bank Lending ◽  
Jel Classification ◽  
Capital Adequacy ◽  
Credit Growth ◽  
Bank Ownership ◽  
Negative Effect ◽  
Asset Quality

We estimate the determinants of credit and of non-performing assets (NPAs) using a firm and a bank panel with data up to 2015 in order to test bank lending against the aggregate demand channel as an explanation for slow Indian credit growth. The results support demand as the key constraint. Only demand variables affect corporate credit for a broad set of firms. Balance sheet weakness reduced credit only for a narrow subset of indebted firms in a difference-in-difference type analysis. Even so, sales remained the dominant variable. From the bank panel, the asset quality review (AQR) did have a strong negative effect on advances but gross NPAs did not. While high interest rates and low growth raised NPAs, so did past credit. Low demand not only reduced credit, it also increased NPAs. That the capital adequacy ratio (CAR) significantly reduces NPAs points to the productivity of fund infusion. When other determinants are controlled, bank ownership does not affect NPA ratios, again supporting external shocks as causal. The results suggest that apart from structural reform to clean balance sheets, recovery of demand is necessary for revival of credit growth. JEL Classification: G21, E51

SHORT-RUN AND LONG-RUN IMPACT OF INFLATION, UNEMPLOYMENT, AND ECONOMIC GROWTH TOWARDS POVERTY IN INDONESIA: ARDL APPROACH

2019 ◽  
Vol 2 (1) ◽  
pp. 15
Author(s):  
Ahmadi Murjani
Keyword(s):  
Economic Growth ◽  
Poverty Alleviation ◽  
Macroeconomic Variables ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Ardl Approach ◽  
Short Run ◽  
The Government ◽  
The Impact

 Poverty alleviation has become a vigorous program in the world in recent decades. In line with the efforts applied by the government in various countries to reduce poverty, some evaluations have been practised. The impacts of macroeconomic variables such as inflation, unemployment, and economic growth have been commonly employed to be assessed for their impact on the poverty. Previous studies in Indonesia yielded mix results regarding the impact of such macroeconomic variables on the poverty. Different methods and time reference issue were the suspected causes. This paper aims to overcome such problem by utilising the Autoregressive Distributed Lag (ARDL) equipped with the latest time of observations. This paper finds in the long-run, inflation, unemployment, and economic growth significantly influence the poverty. In the short-run, only inflation and economic growth are noted affecting poverty significantly. 

scholarly journals Impact of Macroeconomic Factors on Banking Profitabilty

2018 ◽  
Vol 5 (1) ◽  
pp. 44
Author(s):  
Lutfullah Lutf ◽  
Hafizullah Omarkhil
Keyword(s):  
Banking Sector ◽  
Capital Adequacy ◽  
Islamic Banks ◽  
Related Factors ◽  
Comparative Performance ◽  
Macroeconomic Factors ◽  
Macroeconomic Variables ◽  
Interest Income ◽  
Long Run ◽  
The Impact

This study comparatively focuses on the impact of macroeconomic determinants and the internal indicators on bank performance. It comparatively evaluates the differential effects of macroeconomic variables and bank specific variables. Thus, considering five-five banks from each system, a comparative performance investigation between conventional & Islamic banks is the aim of this paper. To determine the short-run and long-run impact of these factors, co-integration & general to specific approach are adopted. This study also considers bank specific and macroeconomic variables in two separate models (Return on Assets and Return on Equity). Our objective is to find whether or not Islamic banks are performing well in the country as compared to their conventional counterparts. The results indicate that in the long run, Gross Domestic Product, and inflation, is positively related to performance, while Interest rate has no effect on the performance of banking sector in Pakistan. Similarly, bank size, capital adequacy, expenses, interest income and non-interest income are the bank related factors that significantly influence the performance of financial sector.

Pro-cyclicality of the Basel Capital Requirement Ratio and Its Impact on Banks

2011 ◽  
Vol 10 (2) ◽  
pp. 22-36 ◽  
Author(s):  
Naoyuki Yoshino ◽  
Tomohiro Hirano
Keyword(s):  
Interest Rates ◽  
Stock Prices ◽  
Bank Lending ◽  
Bank Loans ◽  
Capital Requirement ◽  
Land Prices ◽  
Minimum Capital ◽  
Cross Border ◽  
Minimum Capital Requirement ◽  
Boom Period

This paper proposes replacing the present Basel capital requirement with a new counter-cyclical measure. Optimally, (i) the Basel capital requirement ratio should depend on various economic factors such as the cyclical stage of GDP, credit growth, stock prices, interest rates, and land prices—hence, avoiding the expansion of bank loans during a boom period and a credit crunch during a sluggish period; (ii) the Basel minimum capital requirement rule should be different from country to country since the economic structures and the behavior of banks are different; and (iii) cross-border bank operation should follow the minimum capital requirement ratio where bank lending activities occur rather than the origin of the source of funds.

scholarly journals MACROECONOMIC CONDITION AND BANKING INDUSTRY PERFORMANCE IN INDONESIA

2017 ◽  
Vol 20 (1) ◽  
pp. 71-98
Author(s):  
Mahjus Ekananda
Keyword(s):  
Interest Rates ◽  
Banking Industry ◽  
Capital Adequacy ◽  
The Other ◽  
Exchange Rate Risk ◽  
Macroeconomic Variables ◽  
Dynamic Relationship ◽  
Capital Adequacy Ratio ◽  
Industry Performance ◽  
Bank Soundness

The ratio of non-performing loan (NPL) and capital adequacy ratio (CAR) is still a measure of bank soundness in various countries including Indonesia. Interdependence acros bank’s condition, diversity of the size, market structure within banking industry, and macroeconomic variables, may be very complex and dynamic. This paper utilizes the advantage of PVAR model on capturing this complexity to analyze the dynamic relationship between the macroeconomic variables and the soundness of the banks. The result shows NPL of banks with small asset will increases rapidly when interest rate fluctuates. For banks with large asset, the increase in interest rates leads to larger reduction on their CAR. On the other hand, the result shows banks with smaller capital are less able to adapt quickly to an increase in NPL due to exchangerate depreciation, therefore banks with smaller capital should be cautious about the exchange rate risk.

scholarly journals Do Macroeconomic Variables Influence Domestic Stock Market Price Behaviour in Emerging Markets? A Johansen Cointegration Approach to the Botswana Stock Market

2014 ◽  
Vol 6 (5) ◽  
pp. 363-372 ◽  
Author(s):  
Onneetse L. Sikalao-Lekobane
Keyword(s):  
Stock Market ◽  
Interest Rates ◽  
Price Index ◽  
Market Price ◽  
Share Price ◽  
Macroeconomic Variables ◽  
Bond Yield ◽  
Long Run ◽  
Equilibrium Relationship ◽  
Us Government

The ability of the stock market to reflect real economic activities through fundamental macroeconomic variables in emerging markets remains paramount considering the role of stock markets in the financial system. This paper explores the long-term equilibrium relationship between the Botswana stock market price and selected domestic and global macroeconomic variables using quarterly data for the period 1998 to 2012. The selected macroeconomic variables included Gross Domestic Product (GDP), long and short-term interest rates, money supply, foreign reserves, inflation, diamond price index, exchange rate, US share price index and 10 Year US government bond yield. The paper employs VECM framework following Johansen’s cointegration technique. The analysis revealed that macroeconomic variables and the stock market price are cointegrated, hence, a long-run equilibrium relationship existed between them. The results showed that in the long run, real GDP, short-term interest rates, inflation and diamond index are positively related with stock market price. However, long-term real interest rate, money supply, foreign reserves, exchange rate, US share price index and US government bond yield are negatively related with stock market price in the long run.

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