IDEAS home Printed from https://ideas.repec.org/a/fip/fedbne/y1995imayp15-24.html
   My bibliography  Save this article

Bank regulatory agreements in New England

Author

Listed:
  • Joe Peek
  • Eric S. Rosengren

Abstract

New England's recovery from our most recent recession has been marked by unusually slow growth in bank lending. As of the third quarter of 1994, total loans still had recovered only to 76 percent of the level attained at the peak in the third quarter of 1989. Numerous recent studies have identified low bank capital ratios as a factor contributing to slow growth in loans, but a direct link between the level of bank lending and bank regulation has been established only recently.> To better understand how regulatory policy might directly influence bank lending, this article examines the ways that bank supervisors intervene when a bank's financial situation deteriorates. If a bank's problems are serious, regulators will impose a formal action, a legally enforceable agreement requiring a bank to improve its performance. Among the conditions included in formal regulatory actions, capital requirements have played a key role in altering bank lending behavior. The study documents that the correlation between bank capital and loan shrinkage found in earlier studies has a regulatory link, through the requirements imposed in formal actions.

Suggested Citation

  • Joe Peek & Eric S. Rosengren, 1995. "Bank regulatory agreements in New England," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 15-24.
  • Handle: RePEc:fip:fedbne:y:1995:i:may:p:15-24
    as

    Download full text from publisher

    File URL: http://www.bostonfed.org/economic/neer/neer1995/neer395b.htm
    Download Restriction: no

    File URL: http://www.bostonfed.org/economic/neer/neer1995/neer395b.pdf
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Guizani, Brahim, 2010. "Regulation Policy And Credit Crunch: Evidence From Japan," MPRA Paper 46827, University Library of Munich, Germany, revised 08 May 2013.
    2. Steven Ongena, 1999. "Lending Relationships, Bank Default and Economic Activity," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 6(2), pages 257-280.
    3. Hans Degryse & Steven Ongena, 2002. "Bank-Firm Relationships and International Banking Markets," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(3), pages 401-417.
    4. Guizani, Brahim, 2014. "Capital Requirements, Banking Supervision and Lending Behavior: Evidence from Tunisia," MPRA Paper 54234, University Library of Munich, Germany.
    5. Wako Watanabe, 2004. "Does a Large Loss of Bank Capital Cause Ever-greening or Flight to Quality?: Evidence from Japan," ISER Discussion Paper 0618, Institute of Social and Economic Research, Osaka University.
    6. Jordan, John S. & Peek, Joe & Rosengren, Eric S., 2000. "The Market Reaction to the Disclosure of Supervisory Actions: Implications for Bank Transparency," Journal of Financial Intermediation, Elsevier, vol. 9(3), pages 298-319, July.
    7. Shinichi Nishiyama & Tae Okada & Wako Watanabe, 2006. "Do Banks Reduce Lending Preemptively in Response to Capital Losses?," Discussion papers 06016, Research Institute of Economy, Trade and Industry (RIETI).
    8. Ongena, S. & Smith, D.C., 2000. "Bank relationships : A review," Other publications TiSEM 993b88a5-9a0f-42de-9cec-6, Tilburg University, School of Economics and Management.
    9. Wako Watanabe, 2004. "Prudential Regulation, the Credit Crunch" and the Ineffectiveness of Monetary Policy: Evidence from Japan," ISER Discussion Paper 0617, Institute of Social and Economic Research, Osaka University.
    10. Watanabe, Wako, 2010. "Does a large loss of bank capital cause Evergreening? Evidence from Japan," Journal of the Japanese and International Economies, Elsevier, vol. 24(1), pages 116-136, March.

    More about this item

    Keywords

    Banks and banking - New England;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedbne:y:1995:i:may:p:15-24. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Catherine Spozio). General contact details of provider: http://edirc.repec.org/data/frbbous.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.