The determinants of lending behavior in commercial banks: An empirical examination

This study investigated internal and external determinants of lending behavior in commercial banking sector context in Turkey with panel data method by using data sets of 25 banks over the range of period 2010Q1 to 2021Q3. In this study, panel into seperated four different model as state owned banks, private banks, foreign banks and commercial banking system. Results regarding models were obtained by employing MG and CCEMG coefficient estimators. The results of state owned banks model indicated that internal factors such as; financial intermediation capacity, bank liquidity, bank size and return of assets have positive and statistically significant impacts on bank lending. Likewise, policy rate which is external factors has positive and statistically significant impact on bank lending. On the contrary, some of internal factors such as; volume of deposits, return of equity and net interest margin have negative and statistically significant impacts on bank lending. The results of both private banks model and foreign banks model indicated that internal factors such as; financial intermediation capacity and bank size have positive and statistically significant impacts on bank lending. In both these models, external factors do not have any impact on bank lending. Finally, the result of commercial banking system model indicated that internal factors such as; financial intermediation capacity, volume of deposits and bank size have positive and statistically significant impacts on bank lending. On the contrary, model results also show that GDP, which is one of the external factors has negative and statistically significant impact on the bank lending.