Determinants of Bank Lending 'evidence From Brics Countries'

Abstract

This thesis aims to investigate the determinants of bank lending for the countries forming BRICS, namely Brazil, Russia, India, China, and South Africa. The empirical analysis is performed using a sample of 130 listed commercial banks between 2000 and 2021. While bank-level data is obtained from Thomson Reuters Refinitiv Eikon, country-level data is extracted from the World Bank. The study uses panel data estimation techniques with fixed effects regression models. Study findings show that bank size, capital adequacy ratio, credit risk, the share of deposits and return on asset have a direct influence on bank lending in BRICS countries since all these variables are statistically significant. Larger banks are observed to lend more, and banks with higher shares of deposit, higher capital adequacy ratios, higher return on assets and higher credit risk are observed to lend more. Country-level variables such as gross domestic product per capita, real interest rate, deposit interest rate, and lending interest rate have no direct impact on bank lending. In contrast, banks in countries with higher inflation lend more. This study points out differences in the determinants of bank lending in the BRICS countries versus the rest of the world and offers important policy implications.