Chart 5: Large Commercial Banks Have Tightened Standards for C&I Loans Since Mid-2000

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

Vertical Axis: Net Percentage of Banks Tightening Standards for C&I Loans (Scale=-40 to 80)

Horizontal Axis: This is a time series showing quarterly data between the second quarter of 1990 and the first quarter of 2002

Note: Federal Reserve Board's Loan Officer Opinion Survey on Bank Lending Practices surveys approximately sixty large domestic banks and twenty-four U.S. branches and agencies of foreign banks.

The solid line represents the net percentage of banks surveyed that have tightened standards for C&I loans to large and medium borrowers. Many banks tightened their lending standards before the recession began in the third quarter of 1990, and then gradually eased the standards as the economy recovered. Lending standards remained relatively loose between 1993 and the third quarter of 1998, but became tighter in the fourth quarter of 1998. Lending standards became increasingly tighter beginning in 2000, with over 50 percent of banks reporting tighter standards in the end of 2001.

The dotted line represents the net percentage of banks surveyed that have tightened standards for C&I loans to small borrowers. The trend in lending standards for small borrowers was similar to that of large and medium borrowers throughout most of the decade. Lending standards became tighter in the fourth quarter of 1998, but to a less degree than they did for large and medium borrowers. Lending standards became increasingly tighter beginning in 2000, with over 40 percent of banks reporting tighter standards in the end of 2001.