Abstract
This paper investigates the determinants of bank credit growth in Southeast Asia using panel data from 185 banks across ten countries between 2000 and 2022. Employing fixed-effects models with two-way clustering and robustness checks via GMM, Prais-Winsten, and Newey–West estimators, our study finds that credit risk, bank size, cost-to-income ratio, and inflation significantly constrain credit growth, while the loan-to-deposit ratio, profitability, income diversification, liquidity, and macroeconomic conditions such as money supply and GDP growth promote credit growth. Notably, the COVID-19 pandemic had a substantial negative impact on credit expansion, in contrast to the global financial crisis, which saw a resilient credit supply in the region. Furthermore, in bank-based systems, credit growth is more sensitive to internal bank conditions, especially non-performing loans and profitability—reflecting heavy reliance on traditional intermediation. Conversely, in market-based systems, variables like money supply growth and operational efficiency play a greater role, and the effect of bank-level profitability on credit is reversed. The asymmetric responses to inflation and crisis shocks across systems further underscore the importance of institutional context. These findings provide a more detailed understanding of credit dynamics in ASEAN and offer valuable insights for designing differentiated regulatory and monetary policies.