Determinants of Bank Long-term Lending Behavior: Evidence from Russia

Chernykh, Lucy; Theodossiou, Alexandra K.

Volume 15, Numbers 3 & 4 / September/December , Pages 157-296

Multinational Finance Journal, 2011, vol. 15, no. 3/4, pp. 193-216

Lucy Chernykh , Bowling Green State University, USA Corresponding Author

Alexandra K. Theodossiou , Texas A&M University, Corpus Christi, USA

Abstract:
We investigate the determinants of the banks' propensity to make long-term business loans in an emerging market context. Using a large sample of Russian banks, we find that the median bank allocates only 0.5% of its assets in long-term business loans and that there is wide cross-sectional variation in this ratio among banks. A bank's ability to extend long-term business loans depends on its size, capitalization, and the availability of long-term liabilities rather than its type of ownership. These results highlight the importance of bank-level (supply side) constraints in extending vital long-term credit to firms.

Keywords : emerging market banking; long-term business loans; Russia
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