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The increasing demand on creating underground space in seismic areas has dictated developing research to investigate the seismic response of basement walls. Previous studies indicated discrepancies in terms of the seismic earth pressure on basement walls due to differences in the assumptions related to the wall movement mechanism (yielding versus non-yielding). In this study, the seismic response of basement walls is investigated by developing a numerical model, based on the finite difference method, to simulate the interaction between the basement wall, backfill and foundation soils, and bedrock motion. The model also accounts for the effect of additional stresses from footings resting on the backfill soil. The study reveals an interdependence between the peak acceleration response and the peak seismic thrust and straining actions, which enabled developing empirical correlations to aid the seismic design. It is recommended to classify basement walls as partially-yielding walls from the perspective of their seismic response.