This visualisation shows provides an overview of the lending standards being adopted by the U.S. bank. This data set is provided by the U.S. federal reserve and is collated as part of a survey called Senior Loan Officer Opinion Survey on Bank Lending Practices.  This survey is conducted by the Federal Reserve, involving a group of approximately eighty large domestic banks and twenty-four U.S. branches and agencies of foreign banks. This survey is typically carried out every quarter and occasionally, the Federal Reserve may conduct one or two additional surveys throughout the year.

The survey aims to gather information on changes in lending standards and terms among the participating banks and the current state of demand for loans from businesses and households. Additionally, the survey often includes questions about other relevant topics of interest at the time.

Key Takeaways

As shown in the visualisation, banks ease or tighten lending standards depending on the point we are in the business cycle. Tightening lending standards is a good indicator of an upcoming credit squeeze which eventually can result in a recession. On the contrary, loosening credit standards makes credit available to a larger population and thus aids in economic recovery. Therefore, tighter lending standards have a negative impact on the asset prices or the stock market and loose lending standards corresponds to a risk-off scenario.