Changing Bank Lending Behavior and Corporate Financing in Asia

This paper outlines a number of issues relating to bank lending and corporate finance that deserve further research attention.

It identifies the issues under five broad categories:

• Reasons for bank lending changes;
• Substitutes for bank lending;
• Implications for firms;
• Implications for banks;
• Implications for the financial and corporate structures.

The paper further discusses:

• Recent economic performance and bank lending behavior in Asia;
• Changes in bank lending and corporate financing.

It concludes that:

• Growth in bank lending has slowed in some Asian economies, particularly those directly affected by the financial crisis;
• In others, some segments of the economy still face tremendous barriers to obtaining finance;
• Various issues have emerged in light of changing corporate financing, bank lending, and capital market development, providing ample and interesting research opportunities;
• Sound policies are essential to reduce financial and corporate sector vulnerability to economic shocks, and to enhance the efficiency of investment.