Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/228258
Authors: 
Chen, Kaiji
Higgins, Patrick
Zha, Tao
Year of Publication: 
2020
Series/Report no.: 
Working Paper No. 2020-6
Abstract: 
Lending standards are a direct measure of credit conditions. We use the micro data merged from three separate sources to construct this measure and document that an uncertain macroeconomic outlook, rather than banks' balance sheet positions, was an important reason that a majority of banks tightened bank lending standards during the Great Recession. Our extensive data analysis disciplines how we introduce credit frictions in the banking sector into a macroeconomic model. The model estimation reveals that an exogenous shock to credit supply drives cyclical lending standards and accounts for a significant portion of fluctuations in bank loans and aggregate output.
Subjects: 
asymmetric credit allocation
endogenous regime switching
debt-to-GDP ratio
heavy GDP
heavy loans
real estate
land prices
GDP growth target
nonlinear effects
JEL: 
E32
E44
G21
C51
C81
C82
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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