Bank ownership and lending pattern during 2008 - 2009 financial crisis - Evidence from China

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Journal Title
Journal ISSN
Volume Title
School of Business | Master's thesis
Date
2015
Major/Subject
Finance
Rahoitus
Mcode
Degree programme
Language
en
Pages
51
Series
Abstract
This Master's thesis investigates the different impact on bank lending in China from banks with different ownership during the recent financial crisis in 2008 to 2009. This paper finds that foreign banks in China were generally lending less comparing to banks with joint ownership in non-crisis years, but they did not completely contract their credit supply when the recent financial crisis struck. Government banks were quite supportive during the financial crisis by increasing lending in corporate loans and in construction industry specifically. On the other hand, domestic private banks were the most supportive in the crisis as they have increased their credit supply significantly throughout the 2008 to 2009 financial crisis. This paper also studies how banks' financial performance affected the bank lending in China during the 2008 to 2009 financial crisis. Banks with considerable assets were more supportive in the latter year of the financial crisis and banks with high capitalization were generally lending more in real estate, construction and manufacture industries in 2008 but less in corporate loans in 2009. Banks with high profitability changed their lending strategy during the financial crisis by curtailing lending in corporate loans as well as construction industry. In addition, banks with high solvency became stricter and more careful with their lending and banks with sufficient funding also became more selective in the credit supply in the second year of the recent financial crisis.
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Keywords
bank ownership, bank lending, financial crisis, China
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