Time: 13:00-15:00 (UK Time), Wednesday, 25 January 2023
Presenter: Dr. Tianshu Zhao, University of Birmingham
Co-authors: Dr. Aweng Garang, The United Nations Economic Commission for Africa (UNECA) and Dr. Vera Songwe, Liquidity and Sustainability Facility (LSF)
Chair: Prof. Victor Murinde, SOAS University of London

Abstract

Using COVID-19 as an exogenous shock to the banking system, we empirically evaluate how macroprudential regulation and supervision prior to COVID-19 affects bank lending growth during COVID-19 outbreaks and examine whether and how the accommodative prudential policies and monetary policies taken in response to the crisis affect its impact. Our results suggest that, overall, a tighter pre-crisis macroprudential policy stance per se is not able to withhold the reduction of bank credit post-COVID.  Regarding the macroprudential and monetary policy response in reaction to COVID-19, they appear to alleviate the negative impact of the tighter pre-crisis macroprudential regulations on post-crisis loan growth rate. Our results point to the importance of macroprudential policy intervention and monetary policy initiatives in empowering the financial strength of the banking system preserved by macroprudential stringency prior to COVID-19 to be materialised into loan growth at crisis.  

Keywords 

Macroprudential policies; Bank regulation; bank lending; COVID-19 pandemic 

JEL classification 

G01; G21; G28; L10; E52; E58 

Dr. Tianshu Zhao is a micro-economist with a particular interest in exploiting the micro-economic foundation of the financial development on economic growth. The overall theoretical framework of Dr. Zhao’s research lies on the intersection among Banking, Finance, and Economics. She draws on the theoretical contributions in industrial economics, organizational economics, and institutional economics to investigate the behaviour of banking firms with respect to the provision of credit and risk-taking. She also considers the strategic behaviour of firms in financing real activities within the parameters of the internal and external operational environment and studies the influence of banks on borrowing firms via corporate governance and control. Dr. Zhao’s research outputs to date have been published in top-tier refereed journals – such as the Journal of Banking and Finance, the Review of Economics and Statistics, Economics Geography, Regional Studies, and Journal of Financial Intermediation. 

Co-authors

Dr. Aweng Garang is a Research Fellow in the Office of The Executive Secretary of The United Nations Economic Commission for Africa (UNECA). Garang holds a PhD in Economics from Erciyes University (Kayseri, Turkey). He was a Chevening Scholar at the University of Kent at Canterbury (England) where he graduated with a master’s degree in Economics and Econometrics. His research interests are in the areas of growth convergence, stochastic modelling of general equilibrium, time series analyses, regional integration, gender and climate, financial markets, and sovereign debt. 

Dr. Vera Songwe is Chair of the Liquidity and Sustainability Facility. Songwe is co-chair of the High Level Panel on Climate Finance. She was previously Under-Secretary-General at the United Nations and Executive Secretary of the United Nations Economic Commission for Africa. She is a non-resident senior fellow at the Brookings Institution. Songwe has been recognized as one of Africa’s 100 most influential people in 2020. She recently co-authored a book entitled “ Régional Integration in West Africa: Is There a Role for a Single Currency? “ with Eswar Prasad.  She has spent the last three years championing the cause for additional liquidity for emerging markets and the need for a new global financial architecture fit for the 21st century development challenges.  She has held a number of senior positions at the World Bank, and the International Finance Corporation. Her main areas of interest are fiscal and monetary policy, innovative financing mechanisms for development, agriculture, energy, and economic governance. She has extensive experience working in Africa, East Asia, Europe and Central Asia and South Asia regions. Prior to joining the Bank, Dr. Songwe was a Visiting Scholar at the University of Southern California and at the Federal Reserve Bank of Minneapolis. Dr. Songwe holds a PhD. in Mathematical Economics from the Center for Operations Research & Econometrics from the Catholic University of Louvain-la-Neuve in Belgium. She holds a BA in Economics and a BA in Political Science from the University of Michigan, Ann Arbor.