Working Paper: NBER ID: w7689
Authors: Allen N. Berger; Margaret K. Kyle; Joseph M. Scalise
Abstract: We test three hypotheses regarding changes in supervisory toughness' and their effects on bank lending. The data provide modest support for all three hypotheses that there was an increase in toughness during the credit crunch period (1989-1992), that there was a decline in toughness during the boom period (1993-1998), and that changes in toughness, if they occurred, affected bank lending. However, all of the measured effects are small, with 1% or less of loans receiving harsher or easier classification, about 3% of banks receiving better or worse CAMEL ratings, and bank lending being changed by 1% or less of assets.
Keywords: No keywords provided
JEL Codes: G21; G28; G38; E44; E58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Harsher classifications (Y50) | Reduced lending (G21) |
| Changes in supervisory ratings (G28) | Lending behavior (G21) |
| Increased supervisory scrutiny (G28) | Harsher classifications (Y50) |
| Reduced supervisory scrutiny (G28) | Increased lending (G21) |