Since early 1990, the results of the Federal Reserve Board's Senior Loan Officer Opinion Survey on Bank Lending Practices have been cited frequently as an indicator of general credit availability. Results from the Board's survey suggest that a considerable share of respondent banks were...

Recent survey results from the Senior Loan Officer Opinion Survey indicate that, on net, many banks tightened their loan standards during 1990 and early 1991. This article investigates the implications of these results by comparing them to survey responses from previous periods.

The authors present a theoretical model in which a profit-maximizing lender may ration credit to businesses by restricting loan size. Such credit rationing occurs despite the absence of differences across borrowers in default risk or loan administration costs. Moreover, the model predicts an...