Analysis of Macroeconomic Factors that Impact Corporate Lending in Latvia

Lending gives the company the opportunity to attract to it the necessary financial means for developing or expanding business. But for the bank loans issued are the main source of revenue. The aim of this paper is to analyze the macroeconomic factors that impact corporate lending in Latvian banks and suggest recommendations for improving corporate lending. The study authors to achieve the study aim determine following objectives: To analyze the literature on the previous conducted research on the macroeconomic factors impacting corporate lending;To select for analysis such macroeconomic factors that affecting the volume of lending to Latvian companies as GDP, the consumer price index (CPI), which is a measure of inflation, and the shadow economy due to their relevance to Latvia;Perform multivariate regression and correlation analysis in order to evaluate the relationship between selected macroeconomic factors and the quality of the loan portfolio (non-performing loans). To analyze the literature on the previous conducted research on the macroeconomic factors impacting corporate lending; To select for analysis such macroeconomic factors that affecting the volume of lending to Latvian companies as GDP, the consumer price index (CPI), which is a measure of inflation, and the shadow economy due to their relevance to Latvia; Perform multivariate regression and correlation analysis in order to evaluate the relationship between selected macroeconomic factors and the quality of the loan portfolio (non-performing loans). Methods: content analysis and monographic analysis (collecting the necessary information from various literature sources), economic analysis method and statistical methods (multivariate regression analysis and correlation analysis). Study period: the study period of the study is the selected time period from 2014 to 2022.