Chart 2: C&I Loans Held by Large Commercial Banks Have Exhibited Greater Volatility Since the Mid-1990s

Data Source: Federal Reserve Board H.8 Release (Haver Analytics)

Vertical Axis: Year-Over-Year Change in C&I Loans (Inflation-Adjusted Using GDP Deflator) (Scale=-15% to 20%)

Horizontal Axis: This is a time series showing quarterly data between the first quarter of 1989 to the fourth quarter of 2001

The solid line represents the year-over-year change in real C&I loans (hereafter C&I loans) held by large domestically chartered commercial banks (large banks). C&I loans at large banks remained largely unchanged in 1989, but declined for 17 consecutive months between the first quarter of 1990 and the first quarter of 1994. Between the first quarter of 1991 and the first quarter of 1992, C&I loans declined by 12.2 percent. Since the mid-1990s, C&I loans at large banks have shown greater volatility. C&I loans grew by 12.8 percent during the twelve-month period ending in June 1995, followed by lackluster growth of 1.9 percent during the subsequent twelve-month period. Having reached a peak in the third quarter of 1998, C&I loan growth at large banks slowed dramatically. During the twelve-month period ending in December 2001, C&I loans fell by 11.4 percent.

The dotted line represents the year-over-year change in C&I loans held by small domestically chartered commercial banks (small banks). C&I loan growth at small banks followed a more or less similar trend as large banks until 1994, but began to diverge in 1995. Year-over-year growth in C&I loans held by small banks reached 11 percent in the third quarter of 1995 and then slowed in the next couple of years, but never fell below 6 percent growth. The growth rate reached its cyclical peak in the third quarter of 2000. C&I loans at small banks grew by 16.7 percent during the twelve month period ending in September 2000. Since then the growth rate has slowed notably, but has remained positive. C&I loans grew by 4.2 percent during the twelve month period ending in December 2001.