Banks to Borrowers-Tighter, Tighter

Two-line chart showing U.S. banks tightening lending standards over several periods. Chart subtitle:  A significant portion of domestic banks have tightened lending standards given the uncertain economic outlook. Chart visual description: Data is quarterly and through 4Q22. Y-axis is labeled “Net Percentage of Domestic Banks Tightening Standards,” and ranges from -40% to +100%. X-axis is labeled with quarters in 10-quarter increments, beginning in 2Q90, then 4Q92, 2Q95, and so on through 4Q22. Two data series are charted with lines, and recessionary periods are shaded with light blue behind them. First data series is named, “Commercial/Industrial Loans to Large and Middle-Market Firms” and is charted with dark green line. Second series, “Commercial/Industrial Loans to Small Firms,” is charted in bright green. Chart data description: Leading up to recessionary periods, (four plotted; 3Q90-2Q91, 2Q01-4Q01, 1Q08-3Q09, and 1Q-2Q20) more banks tightened lending standards, with the peak typically near the middle of the recession. Generally, in between, fewer tightened to the point of negative data (or decreasing standards) until the next ramp-up to recession. Peak for Large/Middle line was in 4Q08 with 83.6%; peak for Small line was same quarter at 74.5%. The 4Q22 point was at 39.1% and 31.8%, respectively. Chart source: Source: Federal Reserve Bank of St. Louis as of December 31, 2022. Large and middle-market firms are those with annual sales of $50 million or more, and small firms are those with annual sales of less than $50 million. End chart description. See disclosures at end of document.

Posted on January 13, 2023January 13, 2023 Full size 1720 × 930

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