Bank lending determinants: evidence from Malaysia commercial banks

• Main Authors: Abdul Adzis, Azira, Sheng, Lee Eng, Abu Bakar, Juhaida
• Format: Article
• Language: English
• Published: Sryahwa Publications 2018
• Subjects: HG Finance
• Online Access: http://repo.uum.edu.my/26017/1/JBFM%201%203%202018%2036%2048.pdf; http://repo.uum.edu.my/26017/; https://www.sryahwapublications.com/journal-of-banking-and-finance-management/pdf/v1-i3/5.pdf

This study investigates the bank specific and macroeconomic determinants of commercial bank lending in Malaysia using a sample of 27 banks covering the period from 2005 to 2014. This study also examines the impact of macro prudential policy measure implemented in 2010 on the lending activities of Malaysian commercial banks. Employing random effects estimation, the findings demonstrate that bank size and volume of deposit positively influence commercial bank lending in Malaysia, while liquidity negatively influences the lending activities. With regard to macroeconomic determinants, this study does not find any conclusive evidence to support the influence of gross domestic product (GDP), lending rate and cash reserve requirement on commercial bank lending activities in Malaysia. Moreover, the findings of this study also reveal that the macro prudential policy measure which was implemented in 2010 to curb the high level of household indebtedness does not give any significant impact on lending activities in Malaysia during the study period.