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Who Provides Credit in Times of Crisis? Evidence from the Auto Loan Market

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Abstract

We examine the contribution of different lending channels to the auto loan market in times of crisis. Specifically, we explore lending from traditional banks, credit unions, and finance companies (nonbanks) over the past two decades, with an emphasis on the Great Recession and the COVID-19 pandemic. We find that banks provided weak support during the pandemic, thus losing market share and continuing the trend that emerged following the Great Recession. Nonbank market share during this period grew most significantly for subprime borrowers and in counties with stronger bank dependence. Survey evidence suggests that a tightening in banks’ lending standards may have contributed to this trend. These findings contrast with the experience during the Great Recession, when banks contributed the most resilient credit to the auto loan market. Our paper highlights nonbanks’ increasing role in the auto loan market in times of crisis, particularly for the subprime segment.

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  • Jose J. Canals-Cerda & Brian Jonghwan Lee, 2025. "Who Provides Credit in Times of Crisis? Evidence from the Auto Loan Market," Working Papers 25-06, Federal Reserve Bank of Philadelphia.
    • Handle: RePEc:fip:fedpwp:99505
    DOI: 10.21799/frbp.wp.2025.06
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    More about this item

    Keywords

    nonbanks; auto loans; financial crisis; consumer credit;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment

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