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Discussion Paper
Weathering the Storm: Who Can Access Credit in a Pandemic?
Credit enables firms to weather temporary disruptions in their business that may impair their cash flow and limit their ability to meet commitments to suppliers and employees. The onset of the COVID recession sparked a massive increase in bank credit, largely driven by firms drawing on pre-committed credit lines. In this post, which is based on a recent Staff Report, we investigate which firms were able to tap into bank credit to help sustain their business over the ensuing downturn.
Discussion Paper
Getting More from the Senior Loan Officer Opinion Survey?
Every quarter, senior loan officers at selected large banks around the United States are asked by Fed economists how their standards for approving business loans changed compared with the quarter before. Of all the questions in the Senior Loan Officer Opinion Survey (SLOOS), responses to that question about standards usually attract the most attention from the financial press and researchers. Relatively ignored by comparison are loan officers? reports on how they changed interest spreads, collateral requirements, and other terms on loans they are willing to approve. Lenders can clearly expand ...
Report
Bank Liquidity Provision across the Firm Size Distribution
Using loan-level data covering two-thirds of all corporate loans from U.S. banks, we document that SMEs (i) obtain much shorter maturity credit lines than large firms; (ii) have less active maturity management and therefore frequently have expiring credit; (iii) post more collateral on both credit lines and term loans; (iv) have higher utilization rates in normal times; and (v) pay higher spreads, even conditional on other firm characteristics. We present a theory of loan terms that rationalizes these facts as the equilibrium outcome of a trade-off between commitment and discretion. We test ...
Report
Deposit Specialization and Lending Behavior
We examine how banks’ depositor composition shapes lending behavior, using granular supervisory data on deposits, loans, and securities for the largest U.S. banks. Classifying banks by depositor specialization, we find persistent differences in funding that translate to differences in asset allocations. Retail-depositor oriented banks hold longer-maturity loans and conduct more real estate lending, while corporate- and NBFI-oriented banks, whose funding is more volatile, hold shorter loans and liquid securities. Loan-level analyses show that stable funding is associated with lower rates, ...