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Bank’s Lending Growth in Chile: The Role of the Senior Loan Officers Survey

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  • Alejandro Jara
  • Juan-Francisco Martínez
  • Daniel Oda

Abstract

In order to understand the influence of banks' perceptions on their lending and thus, contribute to the understanding of the transmission of monetary policy, we studied the role of the Senior Loan Officers Survey (SLOS, hereafter), published quarterly by the Central Bank of Chile. The SLOS accounts for changes in the supply of loans and factors affecting the willingness to lend, as well as variations in the demand for credit and its motivations. By including the SLOS in the analysis, we can go beyond the traditional determinants of credit growth rates that appear in the literature. After controlling for macroeconomic factors and idiosyncratic characteristics of banks, we found that the perceptions reported in the SLOS are statistically and economically significant in explaining the dynamics of credit. This result holds for all market segments, and is robust to several specifications. Moreover, we establish that the impact of credit standards and demand perceptions in credit growth rates is asymmetrical and non-linear, being more significant when conditions are tightening.

Suggested Citation

  • Alejandro Jara & Juan-Francisco Martínez & Daniel Oda, 2017. "Bank’s Lending Growth in Chile: The Role of the Senior Loan Officers Survey," Working Papers Central Bank of Chile 802, Central Bank of Chile.
    • Handle: RePEc:chb:bcchwp:802
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    File URL: https://www.bcentral.cl/documents/33528/133326/DTBC_802.pdf
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    References listed on IDEAS

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    11. Matteo Ciccarelli & Angela Maddaloni & Jose Luis Peydro, 2015. "Trusting the Bankers: A New Look at the Credit Channel of Monetary Policy," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(4), pages 979-1002, October.
    12. Lakshmi Balasubramanyan & James B. Thomson & Saeed Zaman, 2013. "Are banks forward-looking in their loan loss provisioning? Evidence from the Senior Loan Officer Opinion Survey (SLOOS)," Working Papers (Old Series) 1313, Federal Reserve Bank of Cleveland.
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    Cited by:

    1. Filardo, Andrew J. & Siklos, Pierre L., 2020. "The cross-border credit channel and lending standards surveys," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 67(C).
    2. Madeira, Carlos, 2019. "The impact of interest rate ceilings on households’ credit access: Evidence from a 2013 Chilean legislation," Journal of Banking & Finance, Elsevier, vol. 106(C), pages 166-179.
    3. Martínez, Juan Francisco & Oda, Daniel, 2021. "Characterization of the Chilean financial cycle, early warning indicators and implications for macro-prudential policies," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 2(1).
    4. Juan Francisco Martínez & Daniel Oda & Gonzalo Marivil, 2022. "Pass-through from monetary policy to bank interest rates: A-symmetry analysis," Working Papers Central Bank of Chile 944, Central Bank of Chile.
    5. Madeira, Carlos, 2021. "The potential impact of financial portability measures on mortgage refinancing: Evidence from Chile," Journal of International Money and Finance, Elsevier, vol. 117(C).

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