银行信贷标准文献翻译.docx

1、银行信贷标准文献翻译原文 Bank Credit Standards By Mitchell BerlinBankers and the business press often speak of cycles in bank credit standards, periods in which banks lending standards are too lax, followed by periods in which standards are too stringent. In this view, bank lending policies tend to amplify fluc

2、tuations in GDP；easy money during the upturn sows the seeds of tight money episodes in the downturn. But this pattern is also consistent with variations in bank lending driven by changes in borrowers default risk over the business cycle or changes in the demand for loans, which rises and falls with

3、GDP. To make sense of the idea of a lending cycle, we must uncover a systematic reason for banks to make unprofitable loans in an upturn and to forgot profitable loans in a downturn. I emphasize that the tendency must be systematic to distinguish the idea of a credit cycle from the truism that loans

4、 made near the peak of an expansion are more likely to go bad simply because bankers (just like economists and other businessmen) have difficulties predicting downturns. What is the evidence for an independent effect for changing bank lending standards that is, a systematic reason why banks might be

5、 too lax or too stringent? And what factors might explain this type of behavior? Economists have proposed a number of plausible models of a bank lending cycle, emphasizing changes in bank capital, competition, or herding behavior. To date, only the channel relating changes in bank capital to lending

6、 standards has firm empirical support.The available evidence is too weak to give us much confidence in assigning an important role for other theories of bank lending standards. WHAT ARE CREDIT STANDARDS? It is helpful to be a little clearer about what we mean by a change in bank credit standards. Le

7、ts begin with a straightforward prescription from investment theory: A profitmaximizing bank should make any loan with a positive net present value (NPV). The NPV of a loan is just the sum of discounted future repayments (principal plus interest) on the loan minus the loan amount. Future repayments

8、must be discounted for two different reasons: First, $10 in the bank now is worth more than $10 paid a year from now. After all, the bank could receive a years interest by purchasing Treasury bills on the $10 paid back tomorrow. Second, the bank recognizes that the borrower may default in the future

9、, so the bank may never receive some future payments. The firm may have a healthy balance sheet at the time the loan is made; a year from now, the borrowing firm may suffer financial setbacks and may be unable to pay back its loan. Using this framework, we can define a change in bank credit standard

10、s as a change in a banks loangranting decisions for some reason other than a change in the NPV of the loan. We can define a credit cycle as a systematic tendency to fund negative NPV loans during an expansion and a systematic tendency to reject positive NPV loans during a contraction. Since bankslen

11、ding decisions also involve the pricing and design of loan contracts, a credit cycle might also take the form of a systematic tendency to relax or tighten loan terms by more than would be justified by changes in borrower risk. Conceptually, it is not too difficult to define a credit cycle. Empirical

12、ly, it may be much harder to tell whether one has occurred. For example, think about some of the things that happen in an economic downturn. As economic conditions become more difficult, more firms experience economic difficulties and the probability that a firm will default increases. This reduces

13、the NPV of a given stream of repayments and would probably induce the bank to raise the loan rate, impose new contractual restrictions, or refuse to make the loan at all. While these actions might be interpreted as a tightening of standards by an outside observer or by an aggrieved borrower, credit

14、standards havent changed according to our definition. Figures 1a and 1b illustrate the distinction between the effects of a tightening of credit standards and the effects of an increase in credit risk. Figure 1a shows a probability distribution of loan applicants NPVs. The profit-maximizing rule for

15、 a bank is to make a loan as long as its NPV is positive (the sum of the shaded regions). If the bank tightens its credit standards, for example, making only loans with an NPV greater than $A, the bank will make a smaller number of loans (just the darker region). Figure 1b illustrates the effects of

16、 a downturn: Loans become riskier and the distribution of NPVs shifts to the left. But this figure shows a bank that retains the profit-maximizing rule. Note that the number of loans made falls in this case also (from the sum of the shaded regions to just the darker region). Slightly more subtly, in

17、 a downturn many loans often go bad at once. Typically, a bank will charge a borrower a higher loan rate if the borrower is likely to default at the same time as other borrowers in a banks portfolio default. To see this, consider a Detroit bank that has a portfolio with a high concentration of loans

18、 to auto parts suppliers. This bank is evaluating two prospective loans with identical probabilities of default. One of the loans is to an auto parts supplier, and the other is to a department store. Even though the probability of default is identical for both projects, the bank will not charge the

19、same default risk premium to both. Instead, the bank will charge a higher risk premium for the loan to the auto parts supplier because its performance is more highly correlated with the rest of the banks portfolio. Taking this idea a step further, economists have found that firms defaults tend to be

20、 correlated.Thus, we should not be surprised that a bank would demand a higher premium for default risk in a downturn as compensation for the higher probability that many loans will go bad at the same time. Although the bank has charged borrowers a higher price for bearing risk, this should not be v

21、iewed as a change in credit standards. In an economic downturn, nonfinancial firms also cut back on investments in plant and equipment and inventories, and, in turn, they cut back on borrowing. A decline in the demand for loans should certainly not be viewed as a change in bank credit standards. We

22、can see the empirical challenge in identifying an independent effect for lending standards on the quantity of loans. Consider an economic downturn. In a downturn, default risk increases, risks become more correlated, and the demand for loans declines. None of these factors reflects a change in lendi

23、ng standards, but all lead to a decline in the quantity of loans made. To uncover a lending cycle, the researcher must find some way todisentangle the effects of changing lending standards from these other effects. THE BROAD FACTS Economists have documented a number of empirical observations that ar

24、e broadly consistent with the existence of a lending cycle.The first empirical observation is that declines in bank capital are associated with declines in bank lending. Ben Bernanke and Cara Lown (among many others) have found evidence that large negative shocks to bank capital （such as those exper

25、ienced by banks in New England at the end of the 1980s ）are associated with declines in bank lending. The relationship between capital and lending is a robust empirical finding, but since the weak economic conditions associated with a decline in bank capital are also associated with higher default r

26、isk, more correlated risks, and a decline in loan demand, economists have had to be ingenious in providing compelling evidence for the capital channel (as I discuss in the next section). A second observation is the well-documented flight to quality during economic downturns. For example, William Lan

27、g and Leonard Nakamura show that bank portfolios shift from high- to low-risk loans during a downturn; specifically, they show that bank portfolios shift away from loans made above the prime rate. Their finding is consistent with evidence that during a downturn, banks systematically shift their port

28、folios toward larger borrowers and toward borrowers with pre-existing loan commitments.While these studies shed light on the ways that bank lending may amplify negative economic shocks, the observed portfolio shifts may simply reflect a rise in default risk during an economic downturn, rather than a

29、n independent role for lending standards, according to our definition. With a rise in default risk, some borrowers are shut out of public debt markets and shift toward bank borrowing, while bank portfolios shift toward lower risk borrowers. A third observation is that loan terms vary systematically

30、over the business cycle in a way that may amplify economic fluctuations. Patrick Asea and Asa Blomberg find that commercial loan markups (the spread between the loan rate and the rate on a riskless Treasury security) fall continuously right up to the beginning of a recession. Their interpretation of

31、 this finding is that credit standards are excessively easy at the end of an expansion, sowing the seeds of future portfolio problems. Jianping Mei and Anthony Saunders provide evidence of trendchasing behavior by banks. They find that banks increase real estate lending when past real estate returns

32、 are high, but that bank real estate investments are unprofitable, on average. These results are consistent with a systematic tendency for excessively lax credit standards during an expansion, and they may also be evidence of a tendency for banks to invest in a herd-like manner. However, the evidenc

33、e from commercial lending and real estate lending markets may simply mean that banks have difficulty predicting a downturn (just like everyone else). Thus, banks may continue lending strongly even as the downturn begins. The most direct evidence for a direct role for bank credit standards comes from survey results. Cara Lown and