Time to Extend Credit? Bank Credit Lines During the COVID-19 Pandemic in Russia

Russian Journal of Money and Finance. 2023. Vol. 82. No. 2. P. 106–119.

Semenova M., Popova P.

This study focuses on the COVID-19 effect on the drawdown on bank credit lines in Russia. Using the bank-level data for all Russian banks for 2017-2020 we document that the first quarter of the pandemic witnesses a significant increase in probability for banks to demonstrate positive loans granted within the credit lines, which – given that banks are not prone to extend credit limits at the beginning of the economic crisis – could signal that the borrowers drawdown funds within the existing credit limits where possible, increasing the overall credit risk of the banking sector. The following quarters show the gradual decrease in the inability of pre-pandemic models to estimate the probability of granting lines of credit, meaning that the banks adapt to new economic reality.  This is the first study examining the COVID-19 shock in credit lines draw dawns using publicly available bank-level data.   

Keywords: bank, кредитная линия, банк, credit line, COVID-19, COVID-19

Publication based on the results of: Regional Economic and Financial Development Diversity: Institutional Analysis of Variation Determinants, External Shocks Impact, and Regulatory Policies’ Efficiency (2023)