Did the Supervisory Guidance on Leveraged Lending Work?

Sooji Kim, Matthew Plosser and Joao Santos

No 20160516, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: Financial regulatory agencies issued guidance intended to curtail leveraged lending?loans to firms perceived to be risky?in March of 2013. In issuing the guidance, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation highlighted several facts that were reminiscent of the mortgage market in the years preceding the financial crisis: rapid growth in the volume of leveraged lending, increased participation by unregulated investors, and deteriorating underwriting standards. Our post shows that banks, in particular the largest institutions, cut leveraged lending while nonbanks increased such lending after the guidance. During the same period of time, nonbanks increased their borrowing from banks, possibly to finance their growing leveraged lending activity.

Keywords: Leveraged; lending (search for similar items in EconPapers)
JEL-codes: G2 (search for similar items in EconPapers)
Date: 2016-05-16
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://libertystreeteconomics.newyorkfed.org/2016 ... ed-lending-work.html Full text (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fednls:87129

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Liberty Street Economics from Federal Reserve Bank of New York Contact information at EDIRC.
Bibliographic data for series maintained by Gabriella Bucciarelli ().