Prudential Policies and Their Impact on Credit in the United States

Paul S. Calem, Ricardo Correa and Seung Jung Lee

No 1186, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

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 the first Comprehensive Capital Analysis and Review (CCAR) stress test in 2011 had a negative effect on the share of jumbo mortgage originations and approval rates at stress-tested banks?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 share of speculative-grade term-loan originations decreased notably at regulated banks after the FAQ notice.

Keywords: Bank stress tests; CCAR; Home Mortgage Disclosure Act (HMDA) data; Jumbo mortgages; Leveraged lending; Macroprudential policy; Shared National Credit (SNC) data; Interagency Guidance on Leveraged Lending; Syndicated loan market (search for similar items in EconPapers)
JEL-codes: G21 G23 G28 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2016-12-13
New Economics Papers: this item is included in nep-ban, nep-cba, nep-cfn and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Related works:
Journal Article: Prudential policies and their impact on credit in the United States (2020)
Working Paper: Prudential policies and their impact on credit in the United States (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgif:1186

DOI: 10.17016/IFDP.2016.1186

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