Bank resilience over the COVID-19 crisis: The role of regulatory capital

Effect of COVID-19 on non-performing loans in China

“…Second, we examine the effect of COVID-19, proxied by COVID-19 cases, COVID-19 cumulative cases, and COVID-19 deaths, on the NPL for China's banks from the perspective of the regulatory capital ratio and bank ownership, while Beck and Keil (2022) only examine COVID-19 deaths on the NPLs for US banks and do not investigate which banks are more resilient during the pandemic. Our paper is also totally different from Cao and Chou (2022) . Although both papers examine the impact of COVID-19 on bank lending, Cao and Chou (2022) examine the impact of the regulatory capital ratio on the loan growth rate while our study focuses on NPLs.…”

“…The results reported in Table 5 show that, unlike the total regulatory capital ratio, high equity ratio and high Tier 1 capital ratio can help banks to significantly mitigate the negative impact of COVID-19 on their NPL ratios. The results imply that in addition to lending more to the economy during the COVID-19 crisis as Cao and Chou (2022) find, banks with more high-quality capital are also more effective in reducing their NPL ratios.…”

“…Our research makes a significant contribution to the growing literature on COVID-19. First, our COVID-19 period is much longer, ranging from Q1 2020 to Q1 2022, than previous studies, such as Beck and Keil (2022) and Cao and Chou (2022) . A longer period of COVID-19 can provide us with more reliable regression results.…”

“…Our study differs from their study by focusing on the characteristics of banks that are more resilient to the COVID-19 crisis. Our study also complements the work of Cao and Chou (2022) by examining the impact of regulatory capital on NPL ratios during the COVID-19 crisis.…”

COVID-19 pandemic, limited attention, and analyst forecast dispersion

“…Our work contributes to the literature by verifying the channel of attention distraction. Second, this study contributes to the literature on COVID-19’s effects on various economic agents from the perspective of analysts ( Awawdeh et al, 2021 ; Iqbal and Bilal, 2021 ; Ngo et al, 2021 ; Cao and Chou, 2022 ; Zeng et al, 2022 ; Duan and Lin, 2022 ; Lööf et al, 2022 ). Moreover, while our research question is close to Gao et al (2021) , we provide different conclusions by improving the measurement of the pandemic.…”