Abstract
The purpose of this paper is to present evidence on the impact of the financial position of Taiwan’s banks on their loan growth rates, and to compare the effect of bank financial position on the growth rate of lending before and after the implementation of Basel II. Through 32 banks including 8 domestic public banks and 24 private banks from 1998 to 2016, a total of 32 banks were used as samples to analyze the relationship between the growth rate of loan and the bank’s financial position, and estimated using system GMM estimator. The main results of this paper are as follows: First, the growth rate of loan is negatively related to the non-performing loans ratio of the previous period. Second, the growth rate of loan is positively correlated with its leverage ratio of the previous period. Finally, the research results also show that after the implementation of Basel II, the bank’s financial position had a more significant impact on the growth rate of lending than before Basel II was implemented.