Template-Type: ReDIF-Paper 1.0

Author-Name: Anna Burova

Author-Email: burovaab@cbr.ru

Author-Workplace-Name: Bank of Russia, Russian Federation


Author-Name: Irina Kozlovtceva

Author-Email: kozlovtsevaid@cbr.ru

Author-Workplace-Name: Bank of Russia, Russian Federation


Author-Name: Andrey Sinyakov

Author-Email: sinyakovaa@cbr.ru

Author-Workplace-Name: Bank of Russia, Russian Federation



Title: Corporate credit in Russia during COVID-19 pandemic: the role of credit lines




Abstract: We study corporate loan composition in Russia during the pandemic along two dimensions. First,
we analyse the quality composition of borrowers of new loans. Like most existing studies, we measure
the quality of borrowers at the levels observed before, not during (or after), the pandemic.

Using probability of default to measure borrower quality, we find that the share of loans provided
by banks to firms with weaker fundamentals, as identified even before the pandemic, increased during
the pandemic. This increase is economically significant. The result does not depend on the ’riskiness’
of banks (as measured by the share of nonperforming loans on their balanceВ­sheets). We argue that
the subsidised loan programmes (with government guarantees) may help to explain this unpleasant
result.

Second, we analyse the share of loans provided during pandemic through credit line utilisation
as compared with new standВ­alone loans. We find that credit line utilisation increased during the
pandemic irrespective of firms’ ex ante probabilities of default. Thus, credit lines played the role of
an automatic stabiliser during the period of high demand for liquidity. At the same time, credit line
utilisation decreased during the pandemic among firms in the exposed industries. We also find that
financially weaker banks tended to have higher shares of credit line utilisation before and during the
pandemic, and this may have implications for the banks’ stability


Length: 40 pages

Creation-Date: 2022-12

Revision-Date:

Publication-Status:

File-URL: http://cbr.ru/StaticHtml/File/143895/wp_110.pdf 

File-Format: Application/pdf

File-Function:

Number:wps110

Classification-JEL:  G21, G32, D22

Keywords: : Corporate credits, credit lines utilisation, credit registery, micro-level data, bank lending, Russia

Handle:RePEc:bkr:wpaper:wps110