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Lending Cycles

  • Asea, P.K.
  • Blomberg, S.B.

We investigate the lending behavior of banks by exploiting a rich oanel dataset on the contract terms of approximately two million commercial and industrial loans granted by 580 banks between 1977-1993. Using a Markov switching panel model we demonstrate that banks change their lending standards - from tightness to laxity - systematically over the cycle. We then use an efficient minimum chi-square estimator.

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Paper provided by Wellesley College - Department of Economics in its series Papers with number 97-01.

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Length: 42 pages
Date of creation: 1997
Date of revision:
Handle: RePEc:fth:wecoec:97-01
Contact details of provider: Postal: U.S.A.; Wellesley College, Department of Economics. Wellesley, Massachusetts 02181
Web page: http://www.wellesley.edu/Economics/

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