Who Provides Credit in Times of Crisis? Evidence from the Auto Loan Market

Jose J. Canals-Cerda and Brian Jonghwan Lee ()

No 25-06, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: We examine the contribution of different lending channels to the auto loan market in times of crisis. Specifically, we explore lending from traditional banks, credit unions, and finance companies (nonbanks) over the past two decades, with an emphasis on the Great Recession and the COVID-19 pandemic. We find that banks provided weak support during the pandemic, thus losing market share and continuing the trend that emerged following the Great Recession. Nonbank market share during this period grew most significantly for subprime borrowers and in counties with stronger bank dependence. Survey evidence suggests that a tightening in banks’ lending standards may have contributed to this trend. These findings contrast with the experience during the Great Recession, when banks contributed the most resilient credit to the auto loan market. Our paper highlights nonbanks’ increasing role in the auto loan market in times of crisis, particularly for the subprime segment.

Keywords: nonbanks; auto loans; financial crisis; consumer credit (search for similar items in EconPapers)
JEL-codes: G01 G21 G23 L62 (search for similar items in EconPapers)
Pages: 48
Date: 2025-02-05
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.philadelphiafed.org/-/media/FRBP/Asset ... ers/2025/wp25-06.pdf (application/pdf)

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:fedpwp:99505

Ordering information: This working paper can be ordered from

DOI: 10.21799/frbp.wp.2025.06

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of Philadelphia Contact information at EDIRC.
Bibliographic data for series maintained by Beth Paul ().