Financial Instability, Uncertainty and Bank Lending Behavior

Authors

  • Vigneshwara Swamy Indian School Of Business, India
  • S. Sreejesh Indian School of Business-Hyderabad, India

DOI:

https://doi.org/10.32890/ijbf2012.9.4.4

Keywords:

Time series models, Financial markets, Interest rates, Bank lending, Financial crisis, Credit declines

Abstract

“Why do banks squeeze their lending activity†is an oft-repeated question during the times of financial crisis. This study examines an emerging economy’s banking system, and contributes to the evolving body of literature on the topic by providing answers to what causes the sluggish bank credit during times of recession. By employing cointegration technique, the study shows that bank credit has a significant positive relationship with the borrowing activities of debt users of the banks, hence, as the contrary an inverse relationship with investment activity is evident during financial crisis. Accordingly, we suggest that banks could increase their lending by increasing the borrowings rapidly either from the Central Banks or from Government supported long term lending institutions during recessionary periods.

 

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Published

04-12-2012

Issue

Vol. 9 No. 4 (2012): International Journal of Banking and Finance (IJBF) Vol. 9, No.4, 2012

Section

Articles

How to Cite

Swamy, V., & Sreejesh, S. (2012). Financial Instability, Uncertainty and Bank Lending Behavior. International Journal of Banking and Finance, 9(4), 74-95. https://doi.org/10.32890/ijbf2012.9.4.4

Research impact

Harvested 2026-09-07
7 citations, from OpenAlex — the highest of the sources checked

Counts differ between services because each indexes a different body of literature. None of them is the whole picture.

Identifiers DOI 10.32890/ijbf2012.9.4.4 OpenAlex W3123641437