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 in:China economic quarterly international 2023-03, Vol.3 (1), p.13-22
Main Authors: Deng, Wei, Ouyang, Zhigang, Yang, Guochao, Xiao, Sai
Format: Article
Language:English
Subjects:
Eligible collateral
Lending facilities
Loan size
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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