Bank lending and the business cycle: Does ownership matter in ASEAN countries?

Sahul Hamid, Fazelina

Abstract

We analyze the lending cyclicality of 213 ASEAN commercial banks over the period 2001–2015. The findings indicate that lending by private banks is procyclical while lending by state banks is countercyclical. Long-term liabilities also move countercyclically for state banks whereas funding for non-state banks in the form of deposit and long-term liabilities is procyclical. Greater lending cyclicality is observed for both private and state banks in Cambodia, Myanmar, Laos, and Vietnam (CMLV) compared to Indonesia, Malaysia, the Philippines, Thailand, and Singapore (ASEAN-5). Lending of non-ASEAN based foreign banks shows greater procyclicality than that of domestic banks for the ASEAN-5 countries, although not for the CMLV countries. During the global financial crisis, lending by non-ASEAN based foreign banks contracted sharply even as lending by ASEAN based foreign banks was unaffected. Overall, our results confirm that bank ownership influences lending and funding sensitivity to economic fluctuations.

• Journal Article Type: Article
• Acceptance Date: Oct 11, 2019
• Publication Date: Feb 1, 2020
• Deposit Date: Dec 20, 2022
• Journal: Journal of Asian Economics
• Print ISSN: 1049-0078
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 66
• Pages: 101153
• DOI: https://doi.org/10.1016/j.asieco.2019.101153
• Keywords: Economics and Econometrics; Finance; Bank ownership; Bank lending; Business cycle and ASEAN banking
• Public URL: https://uwe-repository.worktribe.com/output/10263865
• Publisher URL: https://www.sciencedirect.com/science/article/pii/S104900781830318X?via%3Dihub
• Additional Information: This article is maintained by: Elsevier; Article Title: Bank lending and the business cycle: Does ownership matter in ASEAN countries?; Journal Title: Journal of Asian Economics; CrossRef DOI link to publisher maintained version: https://doi.org/10.1016/j.asieco.2019.101153; Content Type: article; Copyright: © 2019 Elsevier Inc. All rights reserved.