Give them some credit (or not). Business lending during the COVID-19-pandemic: The role of banks in the Netherlands
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2022-08-25
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nl
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What is the role of banks in the growth of business lending during the COVID-19-pandemic in the Netherlands? National institutions argued for a supportive role, but Couaillier et al. (2022) stated that European banks behaved pro-cyclical. Multiple papers studied the effect of changes in banks’ credit standards on credit growth to examine banks’ role. A micro-level data study (Van der Veer & Hoeberichts, 2016) finds that besides these changes, the level of credit standards influences credit growth too. This thesis applies their panel-data model to study the effect of credit standards on credit growth during the COVID-19-pandemic and finds no robust evidence for a different effect of credit standards compared to the periods before the COVID-19-pandemic. A counterfactual analysis shows that credit growth would have been higher if banks had not tightened credit standards during the COVID-19-pandemic, while taking into account the actual credit demand. This argues against the supportive role of banks in business lending during the COVID-19-pandemic.
This thesis contributes to the literature by concluding that the effect of the level of credit standards on credit growth seems to be static over time during multiple types of crises, even during a health crisis such as the COVID-19-pandemic.
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Faculteit der Managementwetenschappen