A Study on Bank Lending Behavior: Do Business Cycle and Government Ownership Affect?

Abstract

This study investigates the bank lending behavior in Vietnam by examining the role of business cycle as well as government ownership over the period 2010-2016. The empirical results support for the procyclical behavior of banking lending behaviour suggesting that banks expand theirs loan in booming period of economy. In addition, state-owned banks are less sensitivity to the change of business cycle than private banks in a booming period. This study sheds further light on the essential role of government-owned bank over the business cycle in the process of financial resource allocation for economic developments in an emerging country context.