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Is Lending by Polish Cooperative Banks Procyclical?

Author

Listed:
  • Christophe Godlewski

    () (Faculty of Business and Law, University of Strasbourg, EM Strasbourg Business School, France)

  • Dorota Skala

    () (WNEiZ, University of Szczecin, Poland)

  • Laurent Weill

    () (EM Strasbourg Business School, University of Strasbourg, France
    Moscow State Institute of International Relations (MGIMO University) Russia)

Abstract

We investigate the lending cyclicality of Polish cooperative banks. Cooperative banks have an important role in the financing of the local economy and as such their sensitivity of their lending behavior to business cycles can influence the financing of small firms. We use a rich dataset of 367 Polish cooperative banks over the period 2007-2013. We find that cooperative banks have a countercyclical lending behavior on the country level, with loan growth negatively linked to national business cycles. We observe that greater bank size contributes to reduce the countercyclical lending behaviour. The lending behavior of cooperative banks is also sensitive to local economic conditions, with some evidence for procyclicality versus the regional economy. Finally, we point out differences in cyclicality of lending across types of borrowers. These findings support the view that the cooperative banking sector should be preserved to mitigate bank lending procyclicality.

Suggested Citation

  • Christophe Godlewski & Dorota Skala & Laurent Weill, 2019. "Is Lending by Polish Cooperative Banks Procyclical?," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 69(4), pages 342-365, August.
  • Handle: RePEc:fau:fauart:v:69:y:2019:i:4:p:342-365
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    cooperative banks; loan growth; cyclicality; local economy; business cycles;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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