Listening to Loan Officers: The Impact of Commercial Credit Standards on Lending and Output

16 Pages Posted: 7 Mar 2006

See all articles by Cara S. Lown

Cara S. Lown

Federal Reserve Banks - Federal Reserve Bank of New York

Donald P. Morgan

Federal Reserve Bank of New York

Sonali Rohatgi

Federal Reserve Bank of New York

Abstract

Over most of the last thirty-three years, the Federal Reserve has polled a small number of bank loan officers about their moves to tighten or ease commercial credit standards. Although the Senior Loan Officer Opinion Survey uses a small sample and gathers only qualitative information, it proves to be a useful tool in predicting changes in commercial lending and output. The authors find a strong correlation between tighter credit standards and slower loan growth and output, even after controlling for credit demand and other predictors of lending and output. The analysis also shows that the loan officer reports can help predict narrower measures of business activity, including inventory investment and industrial production.

Keywords: bank credit, standards, availability, crunch, channel

JEL Classification: E51, E52, E3

Suggested Citation

Lown, Cara S. and Morgan, Donald P. and Rohatgi, Sonali, Listening to Loan Officers: The Impact of Commercial Credit Standards on Lending and Output. Economic Policy Review, Vol. 6, No. 2, July 2000. Available at SSRN: https://ssrn.com/abstract=888769

Cara S. Lown

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045-0001
United States
212-720-1232 (Phone)

Donald P. Morgan (Contact Author)

Federal Reserve Bank of New York ( email )

33 Liberty Street
Research Department
New York, NY 10045
United States
212-720-6573 (Phone)

Sonali Rohatgi

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

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