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Determinants of Loans Growth in Cooperative Banks in Poland: Does Capital Ratio Matter?

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Contemporary Trends and Challenges in Finance


This paper examines the impact of bank capital ratios on cooperative banks’ lending by comparing differences in loan growth to differences in capital ratios at sets of banks that are clustered based on capital ratio size. Applying fixed-effects estimator to sample of cooperative banks operating in Poland and using a unique quarterly dataset covering the period of 1999:4–2012:4 we find that loans growth is particularly capital constrained in poorly-capitalized banks, but only in non-recessionary. Lending of poorly capitalized banks is strongly affected by interest rate margin. Interest rate margin is also important in determining loans growth of medium and large cooperative banks. Generally, our results give support for the view that small banks, such as cooperative banks are not capital constrained in recessionary periods, thus their customers do not suffer from capital crunch in unfavourable macroeconomic conditions. However, their lending activity is procyclical, because increases in unemployment rate result in decreases in loans growth of cooperative banks in Poland.

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  1. 1.

    This data is collected because in accordance with Resolution No. 53/2011 of the Management Board of the National Bank of Poland of September 22, 2011 as amended (NBP Official Journal of 2011 No. 14, 2013 No. 6, No. 47, 2014 No. 40, 2015 No. 38, 2016, No. 2) and pursuant to Regulation of the European Parliament and Council (EU) No 575/2013 of June 26, 2013, (L 176, 06.27.2013 p.1) credit institutions are obliged to provide the NBP with prudential reporting on an individual and consolidated basis.


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We gratefully acknowledge the financial support provided by the National Science Centre (NCN) n Poland, decision no. DEC-2012/05/D/HS4/01356. This paper’s findings, interpretations, and conclusions are entirely those of the authors and do not necessarily represent the views of the institutions with which the authors are affiliated.

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Correspondence to Małgorzata Olszak .

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Olszak, M., Kowalska, I., Świtała, F. (2019). Determinants of Loans Growth in Cooperative Banks in Poland: Does Capital Ratio Matter?. In: Jajuga, K., Locarek-Junge, H., Orłowski, L., Staehr, K. (eds) Contemporary Trends and Challenges in Finance. Springer Proceedings in Business and Economics. Springer, Cham.

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