How Bank Lending Standards Shape the U.S. Macroeconomy

Huberto Ennis and Horacio Sapriza

Richmond Fed Economic Brief, 2026, vol. 26, issue 31

Abstract: Changes in lending standards affect GDP performance, with changes to business lending standards having a greater impact on overall U.S. economic growth than changes to household lending standards. The tightening of business lending standards is associated with a significant and persistent drop in real GDP growth. The magnitude of the effect depends on economic conditions, as it is significantly stronger when GDP is below its long-run trend, interest rates are away from their effective lower bound or economic uncertainty is elevated. A tightening of bank lending standards has a larger, more immediate negative impact on GDP growth than the positive effect of an easing in lending standards.

Keywords: Financial; Institutions; and; Regulation (search for similar items in EconPapers)
Date: 2026
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