Heterogeneity in lending and sectoral growth: evidence from German bank-level data

This paper studies the sectoral and geographical dimensions of the response of bank lending to sectoral growth. We use several bank-level datasets provided by the Deutsche Bundesbank for the 1996-2002 period. Our results show that bank heterogeneity affects how lending responds to domestic sectoral growth. We document that banks? total lending to German firms reacts procyclically to domestic sectoral growth, while lending exceeding a threshold of ?1.5 million to German and foreign firms does not. Moreover, we find that the response of lending depends on bank characteristics such as the banking groups, the banks? asset size, and the degree of sectoral portfolio concentration. We find that total domestic lending by savings banks and credit cooperatives (including their regional institutions), smaller banks, and banks whose portfolios are heavily concentrated in specific sectors responds positively and, in relevant cases, more strongly to domestic sectoral growth

The impact of Internet finance on commercial banks’ risk taking: evidence from China

Background: Internet finance has grown rapidly in China over the past years. Through introducing internet finance's 'reducing management cost' and 'raising capital cost' effects into bank risk-taking model, this paper systematically investigates the dynamic and heterogeneous influence of internet finance on China commercial banks' risk-taking. Methods: Using internet finance index based on 'text mining' and data of 36 commercial banks from 2003 to 2013, we makes an SYS-GMM test. Results: The results show, firstly, the impact of internet finance on China commercial banks' risk-taking is a 'U' trend. The initial development of internet finance can help commercial banks to reduce management cost and risk-taking, but then internet finance will raise capital cost, and turn to exacerbate banks' risk-taking. Secondly, the response of China commercial banks' risk-taking is heterogeneous. Large commercial banks' response is slow, while small and medium banks' response is relatively sensitive. Conclusions: The conclusion showed the complexity of the implication mechanism and functional process of how internet finance affected China commercial banks' risk-taking