The impact of COVID-19 and bank capital ratio on loan changes of ASEAN-5’s banking industry

  • Received September 19, 2022;
    Accepted December 12, 2022;
    Published February 17, 2023
  • Author(s)
  • DOI
    http://dx.doi.org/10.21511/bbs.18(1).2023.07
  • Article Info
    Volume 18 2023, Issue #1, pp. 77-90
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This work is licensed under a Creative Commons Attribution 4.0 International License

The COVID-19 pandemic has affected economies around the world, including the banking industry, and this depends on various factors. The aim of this study is to understand the influence of COVID-19 independently and through the moderation of bank capital ratios on changes in loans of Association of Southeast Asian Nations 5 (ASEAN-5) banking industry players. The study uses a sample of 86 banking companies listed on the stock markets of Indonesia, Malaysia, the Philippines, Singapore, and Thailand from the first quarter of 2018 to the fourth quarter of 2020 by employing the panel data regression technique. The results showed that COVID-19 had a significant negative effect on changes in bank lending. However, a bank’s capital ratio was not found to play a role in moderating the effect of COVID-19 on changes in bank lending. These findings have three main implications: (i) the role of the government in recapitalization and liquidity injection can eliminate differences in behavior between banks with the classification of capital ratios; (ii) there are no signs of zombie lending in ASEAN-5’s banking industry; and (iii) regulating incentives to change bank lending behavior in future crises must take into account that bank capital categorization will not be effective.

Acknowledgment
This study was made possible with the support of a research grant by Universitas Indonesia number NKB-533/UN2.RST/HKP.05.00/2022.

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    • Figure 1. Bank loan levels
    • Table 1. Variables’ operationalization
    • Table 2. Descriptive statistics
    • Table 3. Regression results
    • Conceptualization
      Michael Abraham Hukom, Arief Wibisono Lubis
    • Data curation
      Michael Abraham Hukom
    • Formal Analysis
      Michael Abraham Hukom
    • Investigation
      Michael Abraham Hukom, Arief Wibisono Lubis
    • Methodology
      Michael Abraham Hukom, Arief Wibisono Lubis
    • Project administration
      Michael Abraham Hukom, Arief Wibisono Lubis
    • Resources
      Michael Abraham Hukom, Arief Wibisono Lubis
    • Software
      Michael Abraham Hukom
    • Validation
      Michael Abraham Hukom, Arief Wibisono Lubis
    • Visualization
      Michael Abraham Hukom
    • Writing – original draft
      Michael Abraham Hukom
    • Writing – review & editing
      Michael Abraham Hukom, Arief Wibisono Lubis
    • Funding acquisition
      Arief Wibisono Lubis
    • Supervision
      Arief Wibisono Lubis