Determinants of South American bank credit: An approach to panel data

Vitor Gomes Reginato; Marina Silva da Cuhna; Marcos Roberto Vasconcelos

doi:10.52292/j.estudecon.2020.1334

Authors

Vitor Gomes Reginato State University of Maringá (UEM), Brazil
Marina Silva da Cuhna State University of Maringá (UEM), Brazil
Marcos Roberto Vasconcelos State University of Maringá (UEM), Brazil

DOI:

https://doi.org/10.52292/j.estudecon.2020.1334

Keywords:

bank credit, data panel, South America

Abstract

The objective of this paper is to analyze the determinants of the domestic banking credit in the South American countries, based on panel data, for the period 2000 to 2016. The results indicate that domestic deposits and liabilities to non-residents contribute positively to the growth of private credit, with domestic funding having a more representative impact than foreign funding. Economic growth leads to a greater demand for credit and an increase in credit, while higher domestic and US interest rates reduce credit growth. Rising inflation also negatively affect private sector credit. In addition, as regards credit composition, domestic deposits and economic growth are the main components of credit expansion, and, in turn, inflation and domestic interest rates contribute negatively.

Downloads

Download data is not yet available.

References

Aghion, P., Howitt, P., & Mayer-Foulkes, D. (2005). The effect of fi nancial development on convergence: Theory and evidence. Quarterly Journal of Economics, 120 (1), 173-222. DOI: https://doi.org/10.1162/qjec.2005.120.1.173

Aikman, D., Haldane, A. G., & Nelson, B.D. (2014). Curbing the credit cycle. Economic Journal, 125 (585), 1072-1109. DOI: https://doi.org/10.1111/ecoj.12113

Aizenman, J. (2005). Financial Liberalizations in Latin America in the 1990s: A Reassessment. The World Economy, 28 (7), 959-983. DOI: https://doi.org/10.1111/j.1467-9701.2005.00716.x

Albulescu, C. T. (2009). Forecasting credit growth rate in Romania: from credit boom to credit crunch? Munich Personal RePEc Archive, MPRA Paper No. 16740.

Alessi, L., & Detken, C. (2018). Identifying excessive credit growth and leverage. Journal of Financial Stability, 35, 215-225. DOI: https://doi.org/10.1016/j.jfs.2017.06.005

Almeida, F. D., & Divino, J. A. (2016). Determinantes do Crédito Bancário no Brasil: Uma Análise de Fatores Micro e Macroeconômicos, XLIV Encontro Nacional de Economia da ANPEC. Associação Nacional dos Centros de Pós-Graduação em Economia, Foz do Iguaçu. DOI: https://doi.org/10.22456/2176-5456.52337

Arellano, M. & Bover, O. (1995). Another Look at the Instrumental Variable Estimation of Error-Components Models. Journal of econometrics, 68 (1), 29-51. DOI: https://doi.org/10.1016/0304-4076(94)01642-D

Assefa, M. (2014). Determinants of Growth in Bank Credit to the Private Sector in Ethiopia: A Supply Side Approach. Research Journal of Finance and Accounting, 5 (17), 90-103.

Bagehot, W. (1873). Lombard Street. London: Richard D. Irwin. (1962 Edition). Bastos, E. K. X. (2016). Carta de Conjuntura. Crédito. v. 33, 4º tri.

Beck, T.; Demirguc-Kunt, A.; Laeven, L. & Levine, R. (2008) Finance, Firm Size, and Growth. Journal of Money, Credit and Banking, 40 (7), 1379-1405. DOI: https://doi.org/10.1111/j.1538-4616.2008.00164.x

Beck, T. & Levine, R. (2004). Legal Institutions and Financial Development. NBER Working Paper, No. 10417. DOI: https://doi.org/10.3386/w10417

Bernanke, B. S. & Blinder, A. S. (1992). The Federal Funds Rate and the Channels of Monetary Transmission. American Economic Review, 82 (4), 901-921.

Blum, D. & Nakane, M. I. (2005). O Impacto de Requerimentos de Capital na Oferta de Crédito Bancário no Brasil. Anais do XXXIII Encontro Nacional de Economia da ANPEC. Natal-BR.

Blundell, R. & S. Bond (1998). Initial Conditions and Moment Restrictions in Dynamic Panel Data Models. Journal of Econometrics, 87 (1), 115-143. DOI: https://doi.org/10.1016/S0304-4076(98)00009-8

Calza, A.; Gartner, C. & Sousa, J. (2001). Modelling the demand for loans to the private sector in the Euro area. ECB Working Paper Series, No. 55. DOI: https://doi.org/10.2139/ssrn.356045

Calza, A.; Manrique, M. & Sousa, J. (2003). Aggregate loans to the Euro Area private sector. ECB Working Papers Series, No. 202. DOI: https://doi.org/10.2139/ssrn.376190

Cecchetti, S. G. & Kharroubi, E. (2012). Reassessing the impact of fi nance on growth. BIS Working Papers, No. 381.

Cottarelli, C.; Dell’ariccia, G. & Vladkova-Hollar, I. (2003). Early Birds, Late Risers, and Sleeping Beauties: Bank Credit Growth to the Private Sector in Central and Eastern Europe and the Balkans. IMF Working Paper No.03/213. DOI: https://doi.org/10.5089/9781451874969.001

De Gregorio, J. & Guidotti, P. E. (1995). Financial development and economic growth. World Development, 23 (3), 433-448. DOI: https://doi.org/10.1016/0305-750X(94)00132-I

Drukker, D. M. (2003). Testing for serial correlation in linear panel-data models. Stata Journal, 3 (2), 168-177. DOI: https://doi.org/10.1177/1536867X0300300206

Freitas, M. C. P. & Prates, D. M. (1998). Abertura fi nanceira na América Latina: as experiências da Argentina, Brasil e México. Economia e Sociedade, 7 (2), 173-98.

Fritzer, F. & Reiss, L. (2008). An analysis of credit to the household sector in Austria. Oesterreichische Nationalbank Financial Stability Report, No. 16, 122-34.

Fucidji, J. R. & Prince, D. D. (2009). Determinantes do Crédito Bancário: uma Análise com Dados em Painel para as Maiores Instituições. Análise Econômica. 27 (52), 233-251. DOI: https://doi.org/10.22456/2176-5456.6066

Greene, W. H. (2018). Econometric analysis. New York: Pearson Education International. Guo, K. & Stepanayan, V. (2011). Determinants of Bank Credit in Emerging Market Economies. IMF Working Paper, No. WP/11/51. DOI: https://doi.org/10.5089/9781455218035.001

Harbo Hansen, N. J. & Sulla, O. (2013). Credit Growth in Latin America: Financial Development or Credit Boom? IMF Working Paper, No. WP/13/106. DOI: https://doi.org/10.5089/9781484390627.001

Hicks, J. (1969). A theory of economic history. Oxford: Clarendon Press. Imran, K. & Nishat, M. (2013). Determinants of bank credit in Pakistan: A supply side approach. Economic Modelling, 35, 384-390. DOI: https://doi.org/10.1016/j.econmod.2013.07.022

Jordà, Ò.; Schularick, M. & Taylor, A.M. (2010). Financial crises, credit booms, and external imbalances: 140 years of lessons. IMF Economic Review, 59 (2), 340-378. DOI: https://doi.org/10.1057/imfer.2011.8

Kamil, H. & Rai, K. (2010). The Global Credit Crunch and Foreign Banks Lending to Emerging Markets: Why Did Latin America Fare Better? IMF Working Paper, No. 10/102. DOI: https://doi.org/10.5089/9781455200610.001

King, R. G. & Levine, R. (1993). Finance and growth: Schumpeter might be right. The Quarterly Journal of Economics, 108 (3), 717-737. DOI: https://doi.org/10.2307/2118406

Levine, R. (1997). Financial Development and Economic Growth: Views and Agenda. Journal of Economic Literature, 35, 688-726.

Levine, R.; Loayza, N. & Beck, T. (2000). Financial intermediation and growth: Causality and causes. Journal of Monetary Economics, 46 (1), 31-77. DOI: https://doi.org/10.1016/S0304-3932(00)00017-9

Mendonça, M. J. & Sachsida, A. (2013). Identifi cando a demanda e a oferta de crédito bancário no Brasil. Texto para Discussão No. 1837.

Morales, M. F. (2003). Financial Intermediation in a Model of Growth through Creative Destruction. Macroeconomic Dynamics, 7 (3), 363-393. DOI: https://doi.org/10.1017/S1365100502020138

Rajan, R. G. & Zingales, L. (1998). Financial dependence and growth. American Economic Review, 88 (3), 559-586.

Samargandi, N.; Fidrmuc, J. & Ghosha, S. (2015). Is the Relationship Between Financial Development and Economic Growth Monotonic? Evidence from a Sample of Middle-Income Countries. World Development, 68 (C), 66-81. DOI: https://doi.org/10.1016/j.worlddev.2014.11.010

Schularick, M. & Taylor, A.M. (2012). Credit booms gone bust: monetary policy, leverage cycles, and fi nancial crises, 1870–2008. American Economic Review, 102 (2), 1029-1061. DOI: https://doi.org/10.1257/aer.102.2.1029

Schumpeter, J. A. (1997). A Teoria do Desenvolvimento Económico: uma investigação sobre lucros, capital, crédito, juro e o ciclo econômico. São Paulo: Ed. Abril. Disponible em http://www.ufjf.br/oliveira_junior/files/2009/06/s_Schumpeter_-Teoria_do_Desenvolvimento_Econ%C3%B4mico_-_Uma_Investiga%C3%A7%C3%A3o_sobre_Lucros_Capital_Cr%C3%A9dito_Juro_e_Ciclo_Econ%C3%B4mico.p

Shijaku, G. & Kalluci, I. (2013). Determinants of Bank Credit to the Private Sector: The Case of Albania. Bank of Albania Working Paper, No. 9 (48).

Vasconcelos, M. R.; Fucidji, J. R.; Scorzafave, L. G. & Assis, D. L. (2004). O todo e as partes: uma análise da desigualdade de crédito entre os estados brasileiros e os determinantes do crédito bancário com a aplicação de dados em painel. Economia e Sociedade, 13 (1), 123-149.

Vasconcelos, M. R.; Strachman, E. & Fucidji, J.R. (2003). Liberalização e desregulamentação bancária: motivações, consequências e adaptações. Nova Economia, 13 (1), 101-140.

Wooldridge, J. M. (2002). Econometric analysis of cross section and panel data. Cambridge, Mass.: MIT Press.

Yildirim, H. S. & Philippatos, G.C. (2007). Restructuring, consolidation and competition in Latin America banking markets. Journal of Banking and Finance, 31 (3), 629-639. DOI: https://doi.org/10.1016/j.jbankfin.2006.06.008