Prudential policies and their impact on credit in the United States

Paul Calem, Ricardo Correa and Seung Jung Lee

Journal of Financial Intermediation, 2020, vol. 42, issue C

Abstract: We analyze how two types of recently used prudential policies affected the supply of credit in the United States. First, we test whether the U.S. bank stress tests had any impact on the supply of mortgage credit. We find that initiation of the Comprehensive Capital Analysis and Review (CCAR) stress tests in 2011 had a negative effect on the share of jumbo mortgage originations and approval rates at stress-tested banks, whereby banks with worse capital positions were impacted more negatively. Second, we analyze the impact of the 2013 Supervisory Guidance on Leveraged Lending and subsequent 2014 FAQ notice, which clarified expectations on the Guidance. We find that the institution-specific share of speculative-grade term-loan originations decreased notably at regulated banks after the FAQ notice, especially at banks with greater market share for such loans.

Keywords: Bank stress tests; Jumbo mortgages; Leveraged lending; Macroprudential policy; Syndicated loan market (search for similar items in EconPapers)
JEL-codes: G21 G23 G28 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Related works:
Working Paper: Prudential policies and their impact on credit in the United States (2017)
Working Paper: Prudential Policies and Their Impact on Credit in the United States (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinin:v:42:y:2020:i:c:s1042957319300348

DOI: 10.1016/j.jfi.2019.04.002

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