Finance and Economics Discussion Series (FEDS)
August 2000
Did U.S. Bank Supervisors Get Tougher During the Credit Crunch? Did They Get Easier During the Banking Boom? Did It Matter to Bank Lending?
Allen N. Berger, Margaret K. Kyle, and 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.
Full paper (2367 KB Postscript)Keywords: Bank, lending, supervision, regulation, credit crunch
PDF: Full Paper
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