Determinants of Commercial Bank Lending Evidence in GCC

Abstract

Banking is one of the highly sensitive industries as its most of the revenue is generated from loans. The current study aims to investigate the impact of interest rates, capital sufficiency, asset quality, and liquidity on the lending behavior of commercial leading banks of Gulf Cooperation Council (GCC). For this purpose, the investigator aimed to use a quantitative research method so that only accurate, authentic, and fully updated data can be obtained from the selected population. This research would provide assistance to regulators for the development of credit risk management standards for various credit related problems like economic sector funding, lending restrictions and risk weighted assets, etc. which can put an impact on the asset quality. Moreover, the researcher collected plenty of data from secondary sources to analyze the impact more effectively with good arguments. Furthermore, all the obtained data were further analysed by using a regression model and statistical analysis methods to evaluate the effectiveness, efficiency, and reliability of all the obtained data from various sources. The results of the conducted research suggested that there is a strong impact of various numbers of determinants of commercial banks of GCC on the lending behaviours like interest rates, capital sufficiency, asset quality, and liquidity. The current research study also indicated that the banks of GCC are needed to stay more vigilant in the use of multiple factors while following the lending trends to increase their revenues and profits.