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Did U.S. Bank Supervisors Get Tougher during the Credit Crunch? Did They Get Easier during the Banking Boom? Did It Matter to Bank Lending?

In: Prudential Supervision: What Works and What Doesn't

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Author Info

  • Allen N. Berger
  • Margaret K. Kyle
  • Joseph M. Scalise

Abstract

We test three hypotheses regarding changes in supervisory toughness' and their effects on bank lending. The data provide modest support for all three hypotheses that there was an increase in toughness during the credit crunch period (1989-1992), that there was a decline in toughness during the boom period (1993-1998), and that changes in toughness, if they occurred, affected bank lending. However, all of the measured effects are small, with 1% or less of loans receiving harsher or easier classification, about 3% of banks receiving better or worse CAMEL ratings, and bank lending being changed by 1% or less of assets.

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This chapter was published in:

  • Frederic S. Mishkin, 2001. "Prudential Supervision: What Works and What Doesn't," NBER Books, National Bureau of Economic Research, Inc, number mish01-1, October.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 10764.

    Handle: RePEc:nbr:nberch:10764

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    Cited by:
    1. Allen N. Berger & Gregory F. Udell, 2003. "The institutional memory hypothesis and the procyclicality of bank lending behaviour," BIS Working Papers 125, Bank for International Settlements.
    2. Berger, Allen N. & Klapper, Leora F. & Udell, Gregory F., 2001. "The ability of banks to lend to informationally opaque small businesses," Policy Research Working Paper Series 2656, The World Bank.
    3. Gabriella Chiesa, . "Incentive-based Lending Capacity, Competition and Regulation in Banking," Working Papers 92, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    4. Krainer, Robert, 2009. "Portfolio and financing adjustments for U.S. banks: Some empirical evidence," Journal of Financial Stability, Elsevier, Elsevier, vol. 5(1), pages 1-24, January.
    5. Athanasoglou, Panayiotis & Ioannis, Daniilidis & Manthos, Delis, 2013. "Bank procyclicality and output: Issues and policies," MPRA Paper 50830, University Library of Munich, Germany.
    6. Bruggeman, Annick & Donnay, Marie, 2003. "A monthly monetary model with banking intermediation for the euro area," Working Paper Series, European Central Bank 0264, European Central Bank.
    7. Radu Muntean, 2009. "Early Warning Models for Banking Supervision in Romania," Advances in Economic and Financial Research - DOFIN Working Paper Series, Bucharest University of Economics, Center for Advanced Research in Finance and Banking - CARFIB 39, Bucharest University of Economics, Center for Advanced Research in Finance and Banking - CARFIB.
    8. John R. Hall & Thomas B. King & Andrew P. Meyer & Mark D. Vaughan, 2002. "Do jumbo-CD holders care about anything?," Supervisory Policy Analysis Working Papers, Federal Reserve Bank of St. Louis 2002-05, Federal Reserve Bank of St. Louis.
    9. Curry, Timothy J. & Fissel, Gary S. & Hanweck, Gerald A., 2008. "Is there cyclical bias in bank holding company risk ratings?," Journal of Banking & Finance, Elsevier, Elsevier, vol. 32(7), pages 1297-1309, July.
    10. Kanas, Angelos, 2013. "Bank dividends, risk, and regulatory regimes," Journal of Banking & Finance, Elsevier, Elsevier, vol. 37(1), pages 1-10.

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