{
  "title": "Changes in Bank Lending Standards and the Macroeconomy: Evidence from Mongolia",
  "publication": "IMF Working Papers, December 12, 2025",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2025/12/12/changes-in-bank-lending-standards-and-the-macroeconomy-evidence-from-mongolia-572482",
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  "summary": "This paper examines the macroeconomic effects of credit supply shocks in Mongolia. Using bank credit surveys and a newly constructed indicator of changes in lending standards, adjusted for macroeconomic and bank-specific factors influencing credit demand, we identify the impact of credit supply disr",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Paper examines the macroeconomic effects of credit supply shocks in Mongolia using bank credit surveys and a newly constructed indicator of changes in lending standards.\n- Indicator is adjusted for macroeconomic and bank-specific factors influencing credit demand to isolate credit supply disruptions.\n- Authors: Tigran Poghosyan, Davaasukh Damdinjav, Dulamzaya Batjargal, Tserendavaa Tsend-Ayush, Bat-Orgil Bat-Erdene, Gerelmaa Baatarchuluun.\n- Date: December 12, 2025.\n- Series: Working Paper No. 2025/262, Volume: 2025, Issue: 262, Pages: 26.\n- DOI: https://doi.org/10.5089/9798229031349.001\n- Stock No: WPIEA2025262\n- ISBN: 9798229031349\n- ISSN: 1018-5941"
    },
    {
      "heading": "Methodology",
      "content": "- Data sources: bank credit surveys.\n- Construction: a newly constructed indicator of changes in lending standards adjusted for macroeconomic and bank-specific factors influencing credit demand.\n- Identification strategy: isolate credit supply shocks by purging demand fluctuations using the adjusted lending-standards indicator.\n- Decomposition: separate credit supply shocks into enterprise and household lending components to assess differential macroeconomic impacts."
    },
    {
      "heading": "Key Findings",
      "content": "- A one standard deviation shock to credit supply leads to an initial reduction in:\n  - total lending growth;\n  - output growth;\n  - inflation.\n- Decomposed effects:\n  - Shocks to enterprise lending reduce enterprise lending growth and affect inflation more strongly.\n  - Shocks to household lending reduce household lending growth and have a stronger impact on output growth.\n- Variance decomposition indicates that adjusted credit supply shocks purged from demand fluctuations hold significant explanatory power for the variability of macroeconomic variables.\n- Overall conclusion: results confirm the importance of credit supply shocks for macroeconomic variables in Mongolia."
    },
    {
      "heading": "Variance Decomposition and Relative Importance",
      "content": "- Adjusted credit supply shocks (purged of demand fluctuations) are significant in explaining the variability of:\n  - lending growth (total and by sector);\n  - output growth;\n  - inflation.\n- Relative impacts:\n  - Household credit supply shocks → stronger impact on output growth.\n  - Enterprise credit supply shocks → stronger impact on inflation."
    },
    {
      "heading": "Implications",
      "content": "- Empirical confirmation that credit supply disruptions materially affect Mongolia’s macroeconomic performance through lending, output, and price dynamics.\n- Sectoral differentiation matters: enterprise vs. household credit supply channels have distinct macroeconomic effects, implying that monitoring and policy responses should account for the composition of credit supply shocks.\n\nSource: IMF Working Paper \"Changes in Bank Lending Standards and the Macroeconomy: Evidence from Mongolia\", Working Paper No. 2025/262 (December 12, 2025).\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2025/12/12/changes-in-bank-lending-standards-and-the-macroeconomy-evidence-from-mongolia-572482"
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    "Authors: Tigran Poghosyan, Davaasukh Damdinjav, Dulamzaya Batjargal, Tserendavaa Tsend-Ayush, Bat-Orgil Bat-Erdene, Gerelmaa Baatarchuluun",
    "Published: December 12, 2025",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798229031349.001",
    "Paper examines the macroeconomic effects of credit supply shocks in Mongolia using bank credit surveys and a newly constructed indicator of changes in lending standards.",
    "Indicator is adjusted for macroeconomic and bank-specific factors influencing credit demand to isolate credit supply disruptions.",
    "Authors: Tigran Poghosyan, Davaasukh Damdinjav, Dulamzaya Batjargal, Tserendavaa Tsend-Ayush, Bat-Orgil Bat-Erdene, Gerelmaa Baatarchuluun.",
    "Date: December 12, 2025.",
    "Series: Working Paper No. 2025/262, Volume: 2025, Issue: 262, Pages: 26.",
    "DOI: https://doi.org/10.5089/9798229031349.001",
    "Stock No: WPIEA2025262",
    "ISBN: 9798229031349",
    "ISSN: 1018-5941",
    "Data sources: bank credit surveys.",
    "Construction: a newly constructed indicator of changes in lending standards adjusted for macroeconomic and bank-specific factors influencing credit demand.",
    "Identification strategy: isolate credit supply shocks by purging demand fluctuations using the adjusted lending-standards indicator.",
    "Decomposition: separate credit supply shocks into enterprise and household lending components to assess differential macroeconomic impacts.",
    "A one standard deviation shock to credit supply leads to an initial reduction in:",
    "Decomposed effects:",
    "Variance decomposition indicates that adjusted credit supply shocks purged from demand fluctuations hold significant explanatory power for the variability of macroeconomic variables.",
    "Overall conclusion: results confirm the importance of credit supply shocks for macroeconomic variables in Mongolia.",
    "Adjusted credit supply shocks (purged of demand fluctuations) are significant in explaining the variability of:",
    "Relative impacts:",
    "Empirical confirmation that credit supply disruptions materially affect Mongolia’s macroeconomic performance through lending, output, and price dynamics.",
    "Sectoral differentiation matters: enterprise vs. household credit supply channels have distinct macroeconomic effects, implying that monitoring and policy responses should account for the composition of credit supply shocks.",
    "**Working Paper**"
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