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Prudential policies and their impact on credit in the United States

Type
Publication
Series
BIS Working Paper 635
Date Published
03 May 2017
Sources
Bank for International Settlements Americas office
JEL Classification

We analyze how two types of recently used prudential policies affected the supply of credit in the United States. First, we test whether the U.S. bank stress tests had any impact on the supply of mortgage credit. We find that the first Comprehensive Capital Analysis and Review (CCAR) stress test in 2011 had a negative effect on the share of jumbo mortgage originations and approval rates at stress-tested banks-banks with worse capital positions were impacted more negatively. Second, we analyze the impact of the 2013 Supervisory Guidance on Leveraged Lending and subsequent 2014 FAQ notice, which clarified expectations on the Guidance. We find that the share of speculative-grade term-loan originations decreased notably at regulated banks after the FAQ notice.


The views expressed in this publication are those of the authors and do not necessarily reflect the views of the BIS or its member central banks.