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

Cara Lown and Donald Morgan

No 27, SIFR Research Report Series from Institute for Financial Research

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 of 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.

Keywords: Credit crunch; Credit rationing; Credit standards; Loan officer survey (search for similar items in EconPapers)
JEL-codes: E32 E50 G21 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2004-09-15
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

Downloads: (external link)
http://www.sifr.org/PDFs/sifr-wp27.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
Journal Article: The Credit Cycle and the Business Cycle: New Findings Using the Loan Officer Opinion Survey (2006)
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:hhs:sifrwp:0027

Access Statistics for this paper

More papers in SIFR Research Report Series from Institute for Financial Research Institute for Financial Research Drottninggatan 89, SE-113 60 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Anki Helmer (anki.helmer@sifr.org).