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Changes in bank lending standards and the macroeconomy

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Listed author(s):
  • Bassett, William F.
  • Chosak, Mary Beth
  • Driscoll, John C.
  • Zakrajšek, Egon

Abstract

Identifying macroeconomic effects of credit shocks is difficult because many of the same factors that influence the supply of loans also affect the demand for credit. Using bank-level responses to the Federal Reserve's Loan Officer Opinion Survey, we construct a new credit supply indicator: changes in lending standards, adjusted for the macroeconomic and bank-specific factors that also affect loan demand. Tightening shocks to this credit supply indicator lead to a substantial decline in output and the capacity of businesses and households to borrow from banks, as well as to a widening of credit spreads and an easing of monetary policy.

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File URL: http://www.sciencedirect.com/science/article/pii/S0304393213001645
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Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 62 (2014)
Issue (Month): C ()
Pages: 23-40

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Handle: RePEc:eee:moneco:v:62:y:2014:i:c:p:23-40
DOI: 10.1016/j.jmoneco.2013.12.005
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505566

Keywords: Credit supply disruptions; Bank lending policies; Credit crunch;

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