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Understanding the weakness of bank lending

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Author Info

  • Bell, Venetia

    () (Bank of England)

  • Young, Garry

    () (Bank of England)

Abstract

The flow of new bank lending to UK households and businesses fell sharply following the start of the global financial crisis in mid-2007. That provoked an ongoing debate about the extent to which the sustained weakening of bank lending was caused by a fall in demand for credit, or a fall in supply. While it is difficult to disentangle the effects of shifts in credit demand and supply, this article finds evidence of a substantial and persistent tightening in credit supply conditions from mid-2007. But independently weaker credit demand — probably associated with the impact of the global financial crisis — is also likely to have contributed to the weakness in bank lending.

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Bibliographic Info

Article provided by Bank of England in its journal Bank of England Quarterly Bulletin.

Volume (Year): 50 (2010)
Issue (Month): 4 ()
Pages: 311-320

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Handle: RePEc:boe:qbullt:0035

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  1. Vladimir Yankov & Egon Zakrajsek & Simon Gilchrist, 2009. "Credit Market Shocks and Economic Fluctuations: Evidence from Corporate Bond and Stock Markets," 2009 Meeting Papers 514, Society for Economic Dynamics.
  2. Button, Richard & Pezzini, Silvia & Rossiter, Neil, 2010. "Understanding the price of new lending to households," Bank of England Quarterly Bulletin, Bank of England, vol. 50(3), pages 172-182.
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Cited by:
  1. David Cobham & Yue Kang, 2012. "Financial Crisis And Quantitative Easing: Can Broad Money Tell Us Anything?," Manchester School, University of Manchester, vol. 80, pages 54-76, 09.
  2. Butt, Nicholas & Domit, Silvia & McLeay, Michael & Thomas, Ryland & Kirkham, Lewis, 2012. "What can the money data tell us about the impact of QE?," Bank of England Quarterly Bulletin, Bank of England, vol. 52(4), pages 321-331.
  3. Bunn, Philip & Le Roux, Jeanne & Johnson, Robert & McLeay, Michael, 2012. "Influences on household spending: evidence from the 2012 NMG Consulting survey," Bank of England Quarterly Bulletin, Bank of England, vol. 52(4), pages 332-342.
  4. Pattani, Aashish & Vera, Giuseppe & Wackett , James, 2011. "Going public: UK companies’ use of capital markets," Bank of England Quarterly Bulletin, Bank of England, vol. 51(4), pages 319-330.

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