The Economic Model for the Impact of Bank Lending on Long-Term Growth Rate

Abstract:

           The trends of globalization and the recent financial crisis have drawn attention to the importance of banking credit and its impact on economic growth. In this context, the role of commercial banking lending companies in the economic growth of the Russian Federation comes into focus, particularly the issue of the causal relationship between commercial banking credit and economic growth. This research, through the economic and statistical relationship between the volume of lending and the growth rate of the Russian economy, highlights the importance of financial indicators: the volume of loans issued to individuals and legal entities, the real interest rates on loans, the dynamics of Gross Domestic Product (GDP), and the money supply (M2). A data analysis was conducted to determine whether the loans issued by domestic banks affect the economic growth rate. Annual data for the period from 2012 to 2018 was used. As a result of the data analysis, it was found that loans provided by the banking sector have an impact on economic growth. The data shows that the increase in commercial bank loans to the private sector has risen, which directly affects the real income of the population. At the same time, the analysis of indicator dynamics confirms that the impact of the volume of banking credit on GDP growth and money supply (M2) is more effective during periods of government funding contraction for government programs than during periods of unsupported monetary policy.