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?

As published in PRUDENTIAL SUPERVISION: WHAT WORKS AND WHAT DOESN'T, Frederic S. Mishkin, ed., National Bureau of Economic Research, University of Chicago Press (Chicago, IL)

Posted: 22 Dec 2000

See all articles by Allen N. Berger

Allen N. Berger

University of South Carolina - Darla Moore School of Business; Wharton Financial Institutions Center; European Banking Center

Margaret K. Kyle

London Business School; National Bureau of Economic Research (NBER)

Joseph M. Scalise

University of Pennsylvania, Wharton School; Bain & Company

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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.

Keywords: Bank, lending, supervision, regulation, credit crunch

JEL Classification: G21, G28, G38, E44, E58

Suggested Citation

Berger, Allen N. and Kyle, Margaret K. and Scalise, Joseph M., 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?. As published in PRUDENTIAL SUPERVISION: WHAT WORKS AND WHAT DOESN'T, Frederic S. Mishkin, ed., National Bureau of Economic Research, University of Chicago Press (Chicago, IL). Available at SSRN: https://ssrn.com/abstract=241454

Allen N. Berger (Contact Author)

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

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Margaret K. Kyle

London Business School ( email )

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National Bureau of Economic Research (NBER)

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Joseph M. Scalise

University of Pennsylvania, Wharton School ( email )

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Bain & Company

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