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Applied Economics Letters Volume 30, 2023 - Issue 12
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Research Article

Determinants of bank lending: is there a threshold effect?

Huiran Pana Department of Economics, California State University, Fullerton, CA, USACorrespondence[email protected] [email protected]
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&
Chun Wangb Department of Economics, Brooklyn College, the Graduate Center, City University of New York, New York, NY, USAView further author information
Pages 1676-1679 | Published online: 16 May 2022
 
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ABSTRACT

This study uses a dynamic panel threshold model to explore how the relationship between bank lending and its main determinants depends on various threshold variables. Using a novel instrument to address endogeneity, we find strong evidence for the threshold effects of bank characteristics on loan growth.

JEL CLASSIFICATION:

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 We set the maximum lag of y and x used as instruments to 4.

2 They use banks’ exposure to the real estate sector multiplied by changes in house prices as an instrument variable for bank capital.

Additional information

Funding

Support for this project was provided by the PSC-CUNY Award [62108-00 50], jointly funded by The Professional Staff Congress and The City University of New York.

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