The impact of COVID-19 pandemic on bank lending around the world

Abstract

We evaluate the influence of the pandemic on global bank lending and identify bank and country characteristics that amplify or weaken the effect of the disease outbreak on bank credit. Using a sample of banks from 125 countries, we apply a difference-in-difference methodology and find that bank lending is weaker in countries that are more affected by the health crisis. This effect depends on the bank's financial conditions, market structure, regulatory and institutional environment, financial intermediary and debt market development, ease of access of corporate firms to debt capital, and the response of the public health sector to the crisis.