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Analyzing supply and demand for business loans using microdata from the Senior Loan Officer Survey

Dylan Hogg
Authors registered in the RePEc Author Service: Alejandro Garcia

No 2021-13, Staff Analytical Notes from Bank of Canada

Abstract: Supply and demand factors each have a role in determining the level of business lending in the economy, with most hard data showing only their combined effect on prices and quantities. The Bank of Canada’s Senior Loan Officer Survey (SLOS) helps to separate supply from demand effects by gathering information from financial institutions on their lending (supply) conditions as well as on customer demand for loans. This note examines the information content of the SLOS using institution-level microdata. We find both supply and demand indicators from the SLOS have leading-indicator properties for future business loan growth. Finally, we conduct a counterfactual exercise using SLOS data to examine the role of supply and demand during the financial crisis. We find that supply and, more specifically, heightened risk perception were the key contributors to the contraction of business credit witnessed in that period.

Keywords: Credit and credit aggregates; Financial institutions; Financial stability (search for similar items in EconPapers)
JEL-codes: D22 G01 G2 (search for similar items in EconPapers)
Date: 2021-06
New Economics Papers: this item is included in nep-ban and nep-mac
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