The effectiveness of lending facilities in China —evidence from bank lending

This study examines the impact of lending facilities on commercial banks’ lending and its underlying mechanism by employing the difference-in-difference method utilizing Chinese banking data. It is found that lending facilities significantly increase the scale of lending by commercial banks through...

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Bibliographic Details
Published inChina economic quarterly international Vol. 3; no. 1; pp. 13 - 22
Main Authors Deng, Wei, Ouyang, Zhigang, Yang, Guochao, Xiao, Sai
Format Journal Article
LanguageEnglish
Published Elsevier B.V 01.03.2023
KeAi Communications Co. Ltd
Subjects
Eligible collateral
Lending facilities
Loan size
Eligible collateral
Loan size
Lending facilities
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Summary:This study examines the impact of lending facilities on commercial banks’ lending and its underlying mechanism by employing the difference-in-difference method utilizing Chinese banking data. It is found that lending facilities significantly increase the scale of lending by commercial banks through the channel of the eligible collateral, and this effect has increased over time. The findings confirm for the first time that lending facilities in China play a credit promotion role through the channel of the eligible collateral, providing empirical evidence in the Chinese context of the effectiveness on lending facilities and important insights for improving lending facility operations.
ISSN:2666-9331
2666-9331
DOI:10.1016/j.ceqi.2023.02.001