Loan Standards Tightening & Market Indices
This chart offers a nuanced perspective of lending behaviors in large and small domestic banks alongside relevant market and price indices.
Net Percentage of Domestic Banks Tightening Standards for Commercial and Industrial Loans to Large and Middle-Market Firms: This reflects the proportion of banks that are making it more difficult for large and middle-market firms to secure commercial and industrial loans.
Net Percentage of Domestic Banks Tightening Standards for Commercial and Industrial Loans to Small Firms: This metric reveals the net percentage of banks increasing the difficulty level for small firms to obtain commercial and industrial loans.
Net Percentage of Large Domestic Banks Tightening Standards for Commercial and Industrial Loans to Large and Middle-Market Firms: This shows the net percentage of larger banks that are tightening loan standards for large and middle-market firms.
Net Percentage of Large Domestic Banks Tightening Standards for Commercial and Industrial Loans to Small Firms: This represents the proportion of larger banks that are making it more challenging for small firms to secure commercial and industrial loans.
Wilshire 5000 Total Market Full Cap Index: This is a comprehensive measure of the U.S. stock market's performance.
Sticky Price Consumer Price Index less Food and Energy (right): This index measures the prices that are slow to change, minus the usually volatile food and energy sectors.
By comparing these metrics, we gain insights into the interplay between lending behavior, the stock market, and inflation expectations.
Potential Interpretations:
Positive Scenario: If loan standards remain stable or ease, and the Wilshire 5000 index is on the rise, it suggests a robust economic environment with easy credit conditions.
Negative Scenario: If loan standards tighten significantly and the Wilshire 5000 index is falling, it could indicate that banks perceive more risks in the economy, which could affect market performance negatively.
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