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Long road to normal for bank business lending

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  • Simon H. Kwan

Abstract

Following the 2007?09 financial crisis, bank lending to businesses plummeted. Five years later, the dollar amount of bank commercial and industrial lending has finally surpassed the previous peak. However, despite very accommodative monetary policy and abundant excess reserves in the banking system, the spread of the commercial loan interest rates over the target federal funds rate remains above its long-run average. This suggests that business loans are not yet cheap relative to banks? funding cost.

Suggested Citation

  • Simon H. Kwan, 2014. "Long road to normal for bank business lending," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfel:00025
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