The Credit Cycle and the Business Cycle: New Findings Using the Loan Officer Opinion Survey

Cara Lown and Donald Morgan

Journal of Money, Credit and Banking, 2006, vol. 38, issue 6, 1575-1597

Abstract: VAR analysis on a measure of bank lending standards collected by the Federal Reserve reveals that shocks to lending standards are significantly correlated with innovations in commercial loans at banks and in real output. Credit standards strongly dominate loan rates in explaining variation in business loans and output. Standards remain significant when we include various proxies for loan demand, suggesting that part of the standards fluctuations can be identified with changes in loan supply. Standards are also significant in structural equations of some categories of inventory investment, a GDP component closely associated with bank lending. The estimated impact of a moderate tightening of standards on inventory investment is of the same order of magnitude as the decline in inventory investment over the typical recession.

Date: 2006
References: Add references at CitEc
Citations: View citations in EconPapers (429)

Downloads: (external link)
http://dx.doi.org/10.1353/mcb.2006.0086 full text (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: The Credit Cycle and the Business Cycle: New Findings Using the Loan Officer Opinion Survey (2004)
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:mcb:jmoncb:v:38:y:2006:i:6:p:1575-1597

Access Statistics for this article

Journal of Money, Credit and Banking is currently edited by Robert deYoung, Paul Evans, Pok-Sang Lam and Kenneth D. West

More articles in Journal of Money, Credit and Banking from Blackwell Publishing
Bibliographic data for series maintained by Wiley-Blackwell Digital Licensing () and Christopher F. Baum ().