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Working Paper
Why Do Firms Pay Different Interest Rates on Their Bank Loans?
Amiti, Mary; Kashyap, Anil K.; Kovner, Anna; Weinstein, David E. (2026-02-20)
We document significant variation in interest rates among similar commercial and industrial loans using confidential supervisory data on the largest US banks. This dispersion does not appear to be due to risk. We rationalize the data using a search cost model and find that search costs are highest for smaller and riskier borrowers and lower for public firms, consistent with predictable differences in the costs of screening and monitoring. We find that search costs are substantial. Over a third of firms behave as if they do not comparison shop; half of all firms appear to only obtain two ...
Working Paper , Paper 26-03

Working Paper
Automated Underwriting and Housing Market Dynamics
Johnson, Stephanie; Tzur-Ilan, Nitzan (2025-12-23)
We study how the 1990s adoption of now widely-used automated mortgage underwriting systems affected credit supply, house prices and their comovement across locations. The effects go well beyond processing improvements. By implementing more complex, statistically-informed lending rules, the systems allowed households to borrow more, pushing up house prices. Furthermore, by transmitting a common set of credit standards across lenders, the new technology increased credit and house price synchronization. Together, our results illustrate how new lending technology can generate correlated credit ...
Working Papers , Paper 2506

Working Paper
The ins and outs of mortgage debt during the housing boom and bust
Bhutta, Neil (2014-07-23)
From 1999 to 2013, U.S. mortgage debt doubled and then contracted sharply. Our understanding of the factors driving this volatility in the stock of debt is hampered by a lack of data on mortgage flows. Using comprehensive, individual-level panel data on consumer liabilities, I estimate detailed mortgage inflows and outflows. During the boom, inflows from real estate investors tripled, far outpacing growth from other segments such as first-time homebuyers. During the bust, although defaults and deleveraging are popular explanations for the debt decline, a collapse in inflows has been the major ...
Finance and Economics Discussion Series , Paper 2014-91

Journal Article
Transmission of Sovereign Risk to Bank Lending
Başkaya, Yusuf Soner; Hardy, Bryan; Kalemli-Özcan, Ṣebnem; Yue, Vivian Z. (2023-02-27)
Banks hold a significant exposure to their own sovereigns. An increase in sovereign risk may hurt banks' balance sheets, causing a decrease in lending and a decline in economic activity. We quantify the transmission of sovereign risk to bank lending and provide new evidence about the effect of sovereign risk on economic outcomes. We consider the 1999 Marmara earthquake in Turkey as an exogenous shock leading to an increase in Turkey's default risk. Our empirical estimates show that, for banks holding a higher amount of government securities, the exogenous change in sovereign default risk ...
Policy Hub , Volume 2023 , Issue 2

Working Paper
Time-varying Persistence of House Price Growth: The Role of Expectations and Credit Supply
Chudik, Alexander; Smallwood, Aaron; Choi, Chi-Young (2024-05-15)
High persistence is a prominent feature of price movements in U.S. housing markets, i.e., house prices grow faster this period if they grew faster last period. This paper provides two additional new insights to the literature on U.S. house price movements. First, there exists a significant time variation in the persistence of house price growth, both at the national and city level. Second, there is considerable heterogeneity in the time-varying persistence across different regions, particularly in areas that were historically less persistent, such as the capital-poor regions in the Midwest ...
Globalization Institute Working Papers , Paper 426

Working Paper
Credit Supply Shocks During a Non-Financial Recession
Rivadeneira, Alex; Alcaraz, Carlo; Amoroso, Nicolas; Oviedo Moguel, Rodolfo; Samaniego de la Parra, Brenda; Sapriza, Horacio (2025-08-25)
We study the drivers and real effects of credit supply shocks during a major non-financial recession, the COVID-19 crisis. Using data on the universe of bank loans in Mexico, we isolate the supply-driven component of credit variations. Credit supply conditions deteriorated in this period, driven by banks' heightened risk aversion. Using matched employer-employee records, we find that negative credit supply shocks reduced firms' employment and increased their exit probability. These effects are larger among financially constrained firms and workers with lower separation costs. In the ...
Working Paper , Paper 25-11

Working Paper
The International Bank Lending Channel of Monetary Policy Rates and QE: Credit Supply, Reach-for-Yield, and Real Effects
Peydro, Jose Luis; Morais, Bernardo; Ruiz-Ortega, Claudia (2015-07-02)
We identify the international credit channel of monetary policy by analyzing the universe of corporate loans in Mexico, matched with firm and bank balance-sheet data, and by exploiting foreign monetary policy shocks, given the large presence of European and U.S. banks in Mexico. We find that a softening of foreign monetary policy increases the supply of credit of foreign banks to Mexican firms. Each regional policy shock affects supply via their respective banks (for example, U.K. monetary policy affects credit supply in Mexico via U.K. banks), in turn implying strong real effects, with ...
International Finance Discussion Papers , Paper 1137

Working Paper
The Impact of Regulatory Stress Tests on Bank Lending and Its Macroeconomic Consequences
Bräuning, Falk; Fillat, Jose (2020-10-01)
We use an expansive regulatory loan-level data set to analyze how the portfolios of the largest US banks have changed in response to the Dodd-Frank Act Stress Test (DFAST) requirements. We find that the portfolios of the largest banks, which are subject to stress-testing, have become more similar to each other since DFAST was implemented in 2011. We also find that banks with poor stress-test results tend to adjust their portfolios in a way that makes them more similar to the portfolios of banks that performed well in the stress-testing. In general, stress-testing has resulted in more ...
Working Papers , Paper 20-12

Working Paper
Does CFPB Oversight Crimp Credit?
Vickery, James; Fuster, Andreas; Plosser, Matthew (2020-02-26)
We study how regulatory oversight by the Consumer Financial Protection Bureau (CFPB) affects mortgage credit supply and other aspects of bank behavior. We use a difference-in-differences approach exploiting changes in regulatory intensity and a size cutoff below which banks are exempt from CFPB scrutiny. CFPB oversight leads to a reduction in lending in the Federal Housing Administration (FHA) market, which primarily serves riskier borrowers. However, it is also associated with a lower transition probability from moderate to serious delinquency, suggesting that tighter regulatory oversight ...
Working Papers , Paper 21-08

Working Paper
Stress Tests and Small Business Lending
Cortes, Kristle Romero; Demyanyk, Yuliya; Li, Lei; Loutskina, Elena; Strahan, Philip E. (2018-03-01)
Post-crisis stress tests have altered banks? credit supply to small business. Banks affected by stress tests reduce credit supply and raise interest rates on small business loans. Banks price the implied increase in capital requirements from stress tests where they have local knowledge, and exit markets where they do not, as quantities fall most in markets where stress-tested banks do not own branches near borrowers, and prices rise mainly where they do. These reductions in supply are concentrated among risky borrowers. Stress tests do not, however, reduce aggregate credit. Small banks ...
Working Papers (Old Series) , Paper 1802

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