Understanding the weakness of bank lending
AbstractThe 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 InfoArticle provided by Bank of England in its journal Bank of England Quarterly Bulletin.
Volume (Year): 50 (2010)
Issue (Month): 4 ()
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