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Determinants of bank credit by commercial banks in India

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  • Shveta Singh
  • Rohtash Bhall
  • Kavita Berwal

Abstract

A successful economy depends on banks' ability to allocate loans to borrowers effectively. The current study aims to analyse the determinants of bank credit allotted by commercial banks in India. The ADF and PP tests are used to check the stationarity of the data, and the autoregressive distributed lag approach (ARDL) is used for empirical analysis of the data from 1997 to 2021. The study found that liquidity and bank size affect bank credit in the long run, but credit risk, exchange rate (ER), gross domestic product (GDP), and real lending rate (RLR) have no significant effect on bank credit in the long run. However, in the short run, credit risk and RLR have an important and positive impact on bank credit supply, whereas bank size has a negative and significant influence on bank credit.

Suggested Citation

  • Shveta Singh & Rohtash Bhall & Kavita Berwal, 2025. "Determinants of bank credit by commercial banks in India," International Journal of Indian Culture and Business Management, Inderscience Enterprises Ltd, vol. 36(3), pages 285-300.
    • Handle: RePEc:ids:ijicbm:v:36:y:2025:i:3:p:285-300
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