scholarly journals The Impact of CRD IV on Bank Lending

2019 ◽  
Vol 8 (2) ◽  
pp. 203-217
Author(s):  
Matias Huhtilainen
Keyword(s):  
Bank Lending ◽  
Banking Regulation ◽  
Capital Requirements ◽  
Bank Credit ◽  
Bank Profitability ◽  
Consistent Finding ◽  
Loan Supply ◽  
The Impact ◽  
The Relationship ◽  
Crd Iv

This study addresses the post-financial crisis EU banking regulation reform CRD IV. The specific focus is on the relationship between increased capital requirements and the subsequent change in both supply and the price of bank credit. This study employs a twofold data consisting of a panel of Finnish unlisted savings and cooperative banks’ key figures over the period 2002-2018 and a representative survey conducted with personnel of Finnish institutions. In addition to the consistent finding in regards to the effect of bank profitability as well as fairly consistent findings in regards to the effect of bank size and GDP growth, the key finding suggests a slight decrease in loan supply under the CRD IV.

Bank regulation and credit crunch: evidence from MENA region commercial banks

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Chawki EL-Moussawi ◽  
Mohamad Kassem ◽  
Josse Roussel
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Explanatory Power ◽  
Banking Regulation ◽  
Capital Requirements ◽  
Mena Region ◽  
Institutional Variables ◽  
Content Type ◽  
The Impact ◽  
The Relationship

PurposeThis paper focuses on the relationship between the regulatory capital requirements and the supply of credit for commercial banks that are operating in the MENA region from 1999 till 2017.Design/methodology/approachThe application of the Fixed Effects Model on a panel of commercial banks in the MENA region has shown a negative relationship between supply of credit and both the capital requirements and solvency ratios.FindingsThe results showed that the idiosyncratic, the macroeconomic and the institutional variables affect the supply of credit behavior of banks. The robustness tests using the Two-Stage Least Square method (2SLS) also led to a negative correlation between the growth of credit and capital requirements. Specific macroeconomic and institutional variables have revealed the expected sign and are significant regardless of the estimated specifications.Research limitations/implicationsThis work can be subjected to further future extensions. The explanatory power of our model can be improved by incorporating variables that reflect the corporate governance and structure of banking sector. Similarly, we can also include a variable that takes into account the increasing competition that could affect the stability of the banking sector and therefore the prudential banking regulation.Originality/valuePrevious studies that investigated only the relationship between capital level and risk-taking behavior of banks in the MENA region did not take into account neither the economic and institutional environment nor the impact of these regulations on credit (loans) supply.

Capital requirements, institutional quality and credit crunch in the MENA region

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ali Awdeh ◽  
Chawki EL-Moussawi
Keyword(s):  
Institutional Environment ◽  
Institutional Quality ◽  
Political Stability ◽  
Bank Lending ◽  
Capital Requirements ◽  
Bank Credit ◽  
Credit Crunch ◽  
Mena Region ◽  
Content Type ◽  
The Impact

PurposeThe introduction of Basel capital adequacy standards (I, II and III) has provoked a large body of empirical and theoretical literature that aimed to detect the consequences of risk-based capital rules on bank lending behaviour and credit availability (and the possible emergence of the credit crunch phenomenon), and came up with divergent conclusions. This study aims at participating in this continuous debate but detecting the applicability of the credit crunch theory in the MENA region, taking into consideration the impact of the institutional environment, which may play a role in mitigating the supply-side credit crunch.Design/methodology/approachThis study exploits the Fixed Effects method on a dataset of 210 banks from 14 MENA countries over the period 1999–2016. The paper exploits the percentage change in bank credit as a dependent variable, capital requirements and three institutional quality variables as explanatory variables, in addition to a set of micro- and macro-economic variables.FindingsThe study finds that the implementation of higher capitalisation ratios does participate in a significant decline in bank credit supply. Additionally, by testing the impact of institutional factors on bank lending, it reveals that good governance and political stability encourage banks to extend credit and soften the credit crunch, while higher level of financial freedom discourages banks from expanding loan supply and even magnifies the decline of credit following tightening capital requirements.Practical implicationsThis paper provides very important insight for MENA policymakers and bank regulators by highlighting the importance of the institutional environment factors in amplifying or softening the effect of higher capital requirements in their economies.Originality/valueIn addition to examining an understudied sample of countries, this paper's originality and value added are represented mainly by testing the impact of institutional environment and governance level on bank lending behaviour.

The Impact of Capital Requirements on Bank Lending

2014 ◽  
Author(s):  
Jonathan Bridges ◽  
David Gregory ◽  
Mette Nielsen ◽  
Silvia Pezzini ◽  
Amar Radia ◽  
...  
Keyword(s):  
Bank Lending ◽  
Capital Requirements ◽  
The Impact

In Search of Stability: Bank Capital and Liquidity Requirements

2020 ◽  
pp. 52-70
Author(s):  
Scott James ◽  
Lucia Quaglia
Keyword(s):  
Banking Regulation ◽  
Capital Requirements ◽  
Political Support ◽  
Basel Iii ◽  
Bank Capital ◽  
Financial Industry ◽  
Domestic Constraints ◽  
The Uk ◽  
Institutional Architecture ◽  
Crd Iv

Following the financial crisis, UK preferences shifted decisively in favour of trading up bank capital and liquidity requirements. To reassure voters, elected officials intervened in the regulatory process by strengthening the domestic institutional architecture for banking regulation. Financial regulators leveraged this political support to overcome resistance from the financial industry, but also pushed for international/EU harmonization of capital requirements to avoid damaging the UK’s competitiveness. Internationally, UK regulators therefore acted as pace-setters and exerted significant influence over the design of the Basel III Accord. However, at the EU level, the UK was forced to act as a foot-dragger by prolonging negotiations over the Capital Requirements Directive IV (CRD IV) in an attempt to resist Franco-German efforts to water down the rules. But UK negotiators were more successful in leveraging domestic constraints to oppose the Commission’s attempt to impose the ‘maximum’ harmonization of bank capital.

scholarly journals Financial development in Jordan: Where do remittances play a role in bank credit?

Accounting ◽  
2021 ◽  
Vol 7 (7) ◽  
pp. 1701-1708
Author(s):  
Hadeel Yaseen ◽  
Ghassan Omet
Keyword(s):  
Private Sector ◽  
Financial Development ◽  
Bank Credit ◽  
Research Issues ◽  
Stable Relationship ◽  
Long Run ◽  
Time Period ◽  
The Impact ◽  
The Relationship ◽  
Auto Regression

The Jordanian economy has been a recipient of huge amounts of remittances. Indeed, for more than a decade now, the inflow of this capital has been fluctuating around 10 percent of Gross Domestic Product (GDP). Within this context, the subject matter of remittances has resulted in the development of a myriad of research issues. One of these issues is the impact of remittances on financial development or bank credit to the private sector. This paper looks at the relationship between financial development and remittances in the Jordanian context. Based on the time period 1992-2019, and time series econometric techniques (co-integration and vector auto-regression, among others), this paper examines the impact of remittances on bank credit to the private sector, and on its main sectoral distributions. The estimated results reveal some interesting findings. There is no long-run stable relationship between bank credit to the private sector and remittances. However, there is a stable long-run relationship between credit to individuals (households) and remittances, and between credit to the construction sector and remittances. These conclusions imply that remittances, on average, promote private consumption in general, and residential spending.

scholarly journals Credit components and their impact on the profitability of banks

2021 ◽  
Author(s):  
عمار ياسر عبد الكاظم العابدي
Keyword(s):  
Commercial Banks ◽  
Statistical Tests ◽  
Bank Credit ◽  
Relationship Of ◽  
The Impact ◽  
The Relationship

The research aims to determine the impact of credit components on the profitability of the bank, through the application to a sample of private Iraqi commercial banks, and after studying and identifying the research variables, data were collected for a sample of five private commercial banks for eleven years and for a period of (2004-2015), and then this data was subjected to several statistical tests through the use of spss v.25, and the research came to a set of practical results including that there are The relationship of moral impact between the components of credit and the profitability of the bank at a moral level (0.05), and can benefit from the findings of the research as the interest in the components of bank credit as it positively affects the profitability of the bank, by increasing investment in the components of credit and in the following order, which is the securities first, and loans second.

scholarly journals Analysis of The Relationship among Macroeconomics, Monetary and Income Inequality

2020 ◽  
Vol 9 (4) ◽  
pp. 427-442
Author(s):  
Abdulrahman Taresh A. ◽  
Dyah Wulan Sari ◽  
Rudi Purwono
Keyword(s):  
Income Inequality ◽  
Low Income ◽  
Government Spending ◽  
Bank Credit ◽  
Svar Model ◽  
Low Income Families ◽  
Credit Shocks ◽  
The Impact ◽  
The Relationship ◽  
Auto Regression

Income inequality in Indonesia remains a controversial issue in the context of Indonesian macroeconomic condition that is evolving in output and government spending, and its increase in consumption accompanied by inflation and slowing of bank credit. The purpose of this study is to investigate the relationship among macroeconomics, monetary and income inequality through a broad theoretical model by adopting a panel Structural Vector Auto-regression (SVAR) model to get more sample size during the period 2005-2018 at 33 provinces in Indonesia. The main results indicate that the variables of output and inflation have positive relationships. The relationship between output and income inequality is also significantly correlated, and those results supported by Kuznets's theory reveal that the relationship between economic growth and income inequality is positive in the short term. The relationship between inflation and income inequality is positive as well in Indonesia. This result is by the fact that low-income families are considered more vulnerable to inflation. The impact of non-food consumption shocks increases income inequality, while Indonesian government spending and bank credit shocks reduce income inequality. Then the response of savings and bank credit to the shock of income inequality is positive.

scholarly journals Capital Structure and Bank Profitability in Vietnam: A Quantile Regression Approach

2020 ◽  
Vol 13 (8) ◽  
pp. 168 ◽  
Author(s):  
Tu D. Q. Le ◽  
Dat T. Nguyen
Keyword(s):  
Capital Structure ◽  
Quantile Regression ◽  
Banking System ◽  
Capital Requirements ◽  
Bank Capital ◽  
Bank Profitability ◽  
Continuous Increase ◽  
Regression Approach ◽  
The Impact ◽  
Quantile Regression Method

We empirically investigate the impact of capital structure on bank profitability using a quantile regression method in the Vietnamese banking system during 2007–2019. Our results suggest that the nonlinear relationship between capitalization and bank profitability is only significant at the 90th quantile. This is the first study to conclude that the turning point of capital ratio increases throughout the profitability distribution. Our findings thus suggest that a continuous increase in bank capital requirements does not necessarily result in higher bank profitability.

The Impact of Loan Portfolio Diversification on Tunisian Bank’s Profitability

2018 ◽  
Vol 6 (6) ◽  
pp. 35
Author(s):  
Houda Belguith ◽  
Meryem Bellouma
Keyword(s):  
Panel Data ◽  
Negative Impact ◽  
Bank Lending ◽  
Foreign Banks ◽  
Portfolio Diversification ◽  
Loan Portfolio ◽  
Bank Profitability ◽  
Private Banks ◽  
The Impact ◽  
Positive Effect

This paper examines the effect of loan portfolio diversification on Tunisian banks profitability over the period 2000-2015. By using panel data method, our finding, show that focusing on few sectors is more profitable than diversifying bank lending operations. In addition, we find that this negative impact is more pronounced in private banks. However, for foreign banks loan portfolio diversification is found to be positively associated with higher bank profitability. Also, we find support to the hypothesis stating that the positive effect of loan portfolio diversification is more pronounced for credit risky banks.

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