Trade uncertainty and bank credit growth: evidence from China and the European Union countries
This paper examines the relationship between trade uncertainty and bank lending using a sample of commercial banks in China and the European Union (EU) countries during the period of heightened trade uncertainty from 2017Q1 to 2021Q3 measured by the World Trade Uncertainty (WTU) index. We show that...
Saved in:
| Main Authors: | , |
|---|---|
| Format: | Article |
| Language: | English English |
| Published: |
Bank Indonesia Institute
2024
|
| Subjects: | |
| Online Access: | http://irep.iium.edu.my/112530/1/112530_Trade%20uncertainty%20and%20bank%20credit%20growth.pdf http://irep.iium.edu.my/112530/2/112530_Trade%20uncertainty%20and%20bank%20credit%20growth_SCOPUS.pdf http://irep.iium.edu.my/112530/ https://bulletin.bmeb-bi.org/bmeb/vol27/iss2/5/ |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Institution: | Universiti Islam Antarabangsa Malaysia |
| Language: | English English |
| Summary: | This paper examines the relationship between trade uncertainty and bank lending using a sample of commercial banks in China and the European Union (EU) countries during the period of heightened trade uncertainty from 2017Q1 to 2021Q3 measured by the World Trade Uncertainty (WTU) index. We show that trade uncertainty slows bank credit growth. We find no significant difference in the lending response to trade uncertainty between Chinese and EU banks. Our additional analyses indicate that the credit-reducing effect of trade uncertainty is stronger for better-capitalised banks and more liquid banks. We also find that trade uncertainty is negatively associated with the growth of different bank funding sources, namely, customer deposits, liabilities, and equity. However, we do not find significant evidence that trade uncertainty affects bank credit risk. |
|---|