Recent Developments in Business Lending by Commercial Banks

After growing rapidly during much of the 1990s, the real value of commercial and industrial (C&I) loans at domestic commercial banks and at U.S. branches and agencies of foreign banks has fallen 19 percent since the beginning of 2001. The recent contraction in business loans has been concent...

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Bibliographic Details
Published in:Federal Reserve Bulletin 2003, Vol.89 (12), p.477
Main Authors: Bassett, William F, Zakrajsek, Egon
Format: Newsletterarticle
Language:English
Subjects:
Analysis
Bank acquisitions & mergers
Branch banking
Capital expenditures
Central banks
Commercial banks
Company investment
Consumer credit
Economic conditions
Economic policy
Financial institutions
Forecasts and trends
Growth rate
Inventory
Investments
Market trend/market analysis
Nonperforming loans
Participating loans
Polls & surveys
Recessions
Citations: Items that cite this one
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Summary:After growing rapidly during much of the 1990s, the real value of commercial and industrial (C&I) loans at domestic commercial banks and at U.S. branches and agencies of foreign banks has fallen 19 percent since the beginning of 2001. The recent contraction in business loans has been concentrated at large banking institutions and appears to stem from the combined effects of weak demand for credit and a tightening of lending standards and terms. The move toward a more-stringent lending posture, although partly cyclical, also reflects a reassessment of the risks and returns of C&I lending. This reassessment, in turn, is due partly to structural changes in the market, including the increased participation of nonbank financial institutions, the growth of the secondary loan market, and the greater use of credit derivatives by some banks.
ISSN:0014-9209
1944-8910
DOI:10.17016/bulletin.2003.89-12