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

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  • Andrea Schertler
  • Claudia Buch
  • Natalja Westernhagen

Abstract

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.
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  • Andrea Schertler & Claudia Buch & Natalja Westernhagen, 2006. "Heterogeneity in lending and sectoral growth: evidence from German bank-level data," International Economics and Economic Policy, Springer, vol. 3(1), pages 43-72, April.
    • Handle: RePEc:kap:iecepo:v:3:y:2006:i:1:p:43-72
    DOI: 10.1007/s10368-006-0045-5
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    Cited by:

    1. Bednarek, Peter & Dinger, Valeriya & von Westernhagen, Natalja, 2015. "Fundamentals matter: Idiosyncratic shocks and interbank relations," Discussion Papers 44/2015, Deutsche Bundesbank.
    2. Steven Ongena & Günseli Tümer–Alkan & Natalja von Westernhagen, 2018. "Do Exposures to Sagging Real Estate, Subprime, or Conduits Abroad Lead to Contraction and Flight to Quality in Bank Lending at Home?," Review of Finance, European Finance Association, vol. 22(4), pages 1335-1373.
    3. Christian-Albrechts-Universität zu Kiel, Institut für Betriebswirtschaftslehre (Ed.), 2007. "Jahresbericht 2006," Manuskripte aus den Instituten für Betriebswirtschaftslehre der Universität Kiel 614, Christian-Albrechts-Universität zu Kiel, Institut für Betriebswirtschaftslehre.
    4. Inga Heiland & Erdal Yalcin, 2021. "Export market risk and the role of state credit guarantees," International Economics and Economic Policy, Springer, vol. 18(1), pages 25-72, February.

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    More about this item

    Keywords

    Bank lending; Heterogeneity; Sectoral growth; G21; F3;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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