Lending on Hold: Regulatory Uncertainty and Bank Lending Standards

39 Pages Posted: 19 Oct 2015 Last revised: 31 Mar 2016

See all articles by Stefan Gissler

Stefan Gissler

Board of Governors of the Federal Reserve System

Jeremy Oldfather

Board of Governors of the Federal Reserve System

Doriana Ruffino

Board of Governors of the Federal Reserve System

Date Written: March 28, 2016

Abstract

The 2011--2013 rule-making process for the regulation of qualified mortgages was correlated with a reduction in mortgage lending. In this article, we document this correlation at the bank level. Using a novel measure of banks' perception of regulatory uncertainty, we offer suggestive evidence that banks that perceived higher regulatory uncertainty (or that were more adverse to it) reduced lending more severely. Other channels that might explain banks' lending behavior--investment/securitization, putbacks by government sponsored enterprises, and general economic uncertainty--are also considered.

Keywords: Policy uncertainty; Credit cycles; Qualified mortgages

JEL Classification: G21, G28

Suggested Citation

Gissler, Stefan and Oldfather, Jeremy and Ruffino, Doriana, Lending on Hold: Regulatory Uncertainty and Bank Lending Standards (March 28, 2016). Available at SSRN: https://ssrn.com/abstract=2676124 or http://dx.doi.org/10.2139/ssrn.2676124

Stefan Gissler

Board of Governors of the Federal Reserve System ( email )

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

Jeremy Oldfather

Board of Governors of the Federal Reserve System ( email )

20th and C Streets, NW
Washington, DC 20551
United States

Doriana Ruffino (Contact Author)

Board of Governors of the Federal Reserve System ( email )

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

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