This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Loan growth and loan quality: some preliminary evidence from Texas banks

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Robert T. Clair
Abstract

Following the failures of depository institutions in the 1980s, many analysts concluded that the rapid growth of lending activity and the deterioration of loan quality were related. Robert T. Clair tests this relationship after separating loan growth by its source: increased lending to new or existing customers, bank mergers, and acquisitions of failed banks. The preliminary evidence suggests that additional lending to new or existing customers beyond what might be normal at a given stage of the business cycle lowers loan quality after a three-year lag. This relationship, based on evidence from Texas banks, was especially strong at banks with below-average capitalization. ; Not all loan growth, however, will lead to lower loan quality. Loan growth during an economic expansion is to be expected as loan demand increases. Furthermore, well-capitalized banks were able to grow very rapidly and maintain loan quality. ; One method of increasing lending while maintaining loan quality was through the purchase of failed banks with the assistance of the Federal Deposit Insurance Corporation (FDIC). Of course, these purchases increased lending only for the acquiring banks and did not reflect an increase in total lending for the banking industry. Furthermore, it is possible that FDIC resolution procedures have discouraged the acquisition of weak but still solvent banks by stronger banks and are thereby slowing the rate of needed consolidation in the banking industry.

Download Info
To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Publisher Info
Article provided by Federal Reserve Bank of Dallas in its journal Economic and Financial Policy Review.

Volume (Year): (1992)
Issue (Month): Q III ()
Pages: 9-22
Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Handle: RePEc:fip:fedder:y:1992:i:qiii:p:9-22

Contact details of provider:
Email:
Web page: http://www.dallasfed.org/
More information through EDIRC

Order Information:
Email:

For technical questions regarding this item, or to correct its listing, contact: (Diane Rosenberger).

Related research
Keywords: Bank failures Bank loans

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Neil Esho & Alvin Liaw, 2002. "Should the Capital Requirement on Housing Lending be Reduced? Evidence From Australian Banks," Working Papers wp0009, Australian Prudential Regulation Authority. [Downloadable!]
  2. Jesus, Saurina & Gabriel, Jimenez, 2006. "Credit Cycles, Credit Risk, and Prudential Regulation," MPRA Paper 718, University Library of Munich, Germany. [Downloadable!]
  3. Martín Vallcorba & Javier Delgado, 2007. "Determinantes de la morosidad bancaria en una economía dolarizada. El caso uruguayo," Banco de España Working Papers 0722, Banco de España. [Downloadable!]
  4. Christophe Godlewski, 2004. "Excess Credit Risk and Bank’s Default Risk An Application of Default Prediction’s Models to Banks from Emerging Market Economies," Finance 0409028, EconWPA. [Downloadable!]
  5. Jaap Bikker & Paul Metzemakers, 2004. "Is bank capital procyclical? A cross-country analysis," DNB Working Papers 009, Netherlands Central Bank, Research Department. [Downloadable!]
  6. Santiago Fernández de Lis & Jorge Martínez Pagés & Jesús Saurina, 2000. "Credit Growth, Problem Loans and Credit Risk Provisioning in Spain," Banco de España Working Papers 0018, Banco de España. [Downloadable!]
  7. Jacob A. Bikker & Paul A.J. Metzemakers, 2003. "Bank Provisioning Behaviour and Procyclicality," DNB Staff Reports (discontinued) 111, Netherlands Central Bank. [Downloadable!]
    Other versions:
  8. Darren Pain, . "The provisioning experience of the major UK banks: a small panel investigation," Bank of England working papers 177, Bank of England. [Downloadable!]
  9. Gabriel Jiménez & Jesús Saurina, 2006. "Credit Cycles, Credit Risk, and Prudential Regulation," International Journal of Central Banking, International Journal of Central Banking, vol. 2(2), May. [Downloadable!]
  10. Jesús Saurina-Salas, 1998. "Determinantes de la morosidad de las cajas de ahorro españolas," Investigaciones Economicas, Fundación SEPI, vol. 22(3), pages 393-426, September. [Downloadable!]
  11. Gabriel Jiménez & Jesús Saurina, 2005. "Credit cycles, credit risk, and prudential regulation," Banco de España Working Papers 0531, Banco de España. [Downloadable!]
Statistics
Access and download statistics

Did you know? IDEAS also covers the most complete directory of Economics departments and institutes, EDIRC.

This page was last updated on 2008-7-29.


This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.