Managing the credit risk inherent to a corporate credit line is similar to that of a term loan, but with one key difference. For both instruments, the bank should know the borrower's probability of default (PD) and the facility's loss given default (LGD). However, since a credit line allows the...

The U.S. banking industry is experiencing a renewed interest in retail banking, broadly defined as the range of products and services provided to consumers and small businesses. This article documents the “return to retail” in the U.S. banking industry and offers some insight into why the...

The Federal Reserve's quarterly Survey of Terms of Business Lending, which has been conducted for more than twenty years, collects information on interest rates and other characteristics of commercial bank business loans. The survey has been changed from time to time to recognize innovations in...

After growing rapidly during much of the 1990s, the real value of commercial and industrial (C&I) loans at domestic commercial banks and at U.S. branches and agencies of foreign banks has fallen 19 percent since the beginning of 2001. The recent contraction in business loans has been...

Although loan quality in the U.S. banking industry deteriorated in recent years, a comparison with the banking crisis of the late 1980s and early 1990s suggests that the industry is in a far better position today than it was a decade ago. The percentage of troubled loans is lower, loan quality...

We examine the effects of over 6,000 M&As involving more than 10,000 banks on small business lending. We are the first to decompose the impact of M&As into static effects associated with a simple melding of the antecedent institutions and dynamic effects associated with post-M&A refocusing of...

Financial innovation has been described as the “life blood of efficient and responsive capital markets.” Yet, there have been few quantitative investigations of financial innovation and the diffusion of these new technologies. Of the latter, there have been only three prior quantitative...