Bank Loan Supply Responses to Federal Reserve Emergency Liquidity Facilities

54 Pages Posted: 28 Apr 2014 Last revised: 19 Feb 2018

See all articles by Allen N. Berger

Allen N. Berger

University of South Carolina - Darla Moore School of Business

Lamont Black

DePaul University - Driehaus College of Business; Center for Financial Services

Christa H. S. Bouwman

Texas A&M University; Wharton Financial Institutions Center

Jennifer Dlugosz

Board of Governors of the Federal Reserve System

Date Written: March 13, 2017

Abstract

The Federal Reserve injected unprecedented liquidity into banks during the recent crisis through the discount window and Term Auction Facility. We examine the use and effectiveness of these facilities. We find that recipient banks increased their lending overall, both short- and long-term, and in most loan categories. The facilities resulted in enhanced lending at expanding banks and reduced declines at contracting banks. Small banks increased small business lending and large banks increased large business lending. There were no significant changes in loan quality or loan contract terms by either large or small banks.

Keywords: Banks, Discount Window, Term Auction Facility, Central Bank, Lending

JEL Classification: G21, G28, E58

Suggested Citation

Berger, Allen N. and Black, Lamont and Bouwman, Christa H. S. and Dlugosz, Jennifer, Bank Loan Supply Responses to Federal Reserve Emergency Liquidity Facilities (March 13, 2017). Journal of Financial Intermediation, Vol. 32, 2017, Available at SSRN: https://ssrn.com/abstract=2429710 or http://dx.doi.org/10.2139/ssrn.2429710

Allen N. Berger

University of South Carolina - Darla Moore School of Business ( email )

1014 Greene St.
Columbia, SC 29208
United States
803-576-8440 (Phone)
803-777-6876 (Fax)

Lamont Black

DePaul University - Driehaus College of Business ( email )

1 East Jackson Blvd.
Chicago, IL 60604-2287
United States
312-362-5617 (Phone)
312-362-6566 (Fax)

HOME PAGE: http://driehaus.depaul.edu/faculty-and-staff/faculty/Pages/black-lamont.aspx

Center for Financial Services

1 East Jackson Blvd.
Chicago, IL 60604-2287
United States

HOME PAGE: http://https://business.depaul.edu/about/centers-institutes/financial-services/Pages/default.aspx

Christa H. S. Bouwman (Contact Author)

Texas A&M University ( email )

360H Wehner
College Station, TX 77843-4218
United States
979-845-3514 (Phone)
979-845-3514 (Fax)

HOME PAGE: http://people.tamu.edu/~cbouwman/

Wharton Financial Institutions Center

2306 Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104
United States

Jennifer Dlugosz

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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