Empir Econ https://doi.org/10.1007/s00181-018-1436-5 Bank lending and loan quality: an emerging economy perspective 1 2 Pallavi Chavan · Leonardo Gambacorta Received: 19 April 2016 / Accepted: 10 March 2018 © Springer-Verlag GmbH Germany, part of Springer Nature 2018 Abstract This paper analyses how non-performing loans (NPLs) in the emerging economy of India behave through the cycle. We ﬁnd that a one-percentage point increase in loan growth is associated with an increase in NPLs over total advances (NPL ratio) of 4.1% in the long run with the response being higher during expansionary phases. Furthermore, NPL ratios of banks are found to be sensitive to the interest rate environment and the overall growth of the economy. Notwithstanding differences in management and governance structures, there is a procyclical risk-taking response to credit growth in the case of both public and private banks with private banks being more reactive to changes in interest rate and business cycle conditions. Keywords Procyclicality · Loan quality · Bank lending · Emerging economy · Bank ownership · Moral hazard JEL Classiﬁcation E320 · G210 · G010 We thank Claudio Borio, Romar Correa, Saibal Ghosh, Gabriel Jiménez, Richhild Moessner, Madhusudan Mohanty, Suresh Sundaresan and, in particular, two anonymous referees
Empirical Economics – Springer Journals
Published: Jun 2, 2018
It’s your single place to instantly
discover and read the research
that matters to you.
Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.
All for just $49/month
Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly
Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.
Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.
Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.
All the latest content is available, no embargo periods.
“Hi guys, I cannot tell you how much I love this resource. Incredible. I really believe you've hit the nail on the head with this site in regards to solving the research-purchase issue.”Daniel C.
“Whoa! It’s like Spotify but for academic articles.”@Phil_Robichaud
“I must say, @deepdyve is a fabulous solution to the independent researcher's problem of #access to #information.”@deepthiw
“My last article couldn't be possible without the platform @deepdyve that makes journal papers cheaper.”@JoseServera