Patterns of utilisation of corporate credit lines and their implication for financial stability

Credit lines are an important source of financing for economic activities in different countries, including Russia. It is important to identify the factors affecting the utilisation of contingent loans in order to better understand the tendencies on the financial market and to identify possible risks for all participants in the loan market. We use credit registry data on all the credit on banks’ balance sheets as of the beginning of 2017. We split our study into three parts: credit lines which have reached their limits, credit lines with the full limit still available and credit lines in the middle state. For fully used credit lines, we show that a large share of them appear similar to regular loans (the company immediately uses the entire available limit and repays the funds when the loan matures). For two other groups we identify factors affecting the timing of the first credit line draw-down and the utilisation rate. For several factors we show that their impact coincides with what has been shown in other studies: dummy variable on the credit line issued by the company’s main bank (credit lines obtained from the main bank are used more intensively), the age of credit line (the older the credit line, the less the utilisation rate), etc. Other variables in this study show the opposite effect compared to other papers. For example, the length of relationship with the bank in earlier studies negatively affects the utilisation rate of the credit line, while we can see that this factor has a positive impact in this study. We also show that lines with the fixed interest rate are used more intensively than those with floating rates. In cases of non-revolving credit lines this result is robust across all time sub-samples, both during tightening and easing of credit conditions. These findings may be significant for understanding the credit line utilisation process for the financial market participants as well as for monetary and prudential policies.