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SUMMARY:Expectations and Bank Lending
DTSTART:20211001T160000
DTEND:20211001T173000
DTSTAMP:20260407T055834Z
UID:fe652e8192eb8a2509668452e056aeee316086a78f470f14f1ac62d1
CATEGORIES:Conferences - Seminars
DESCRIPTION:Yueran Ma\, Chicago Booth\nWe study the properties and the imp
 act of lenders’ expectations using a new dataset on banks’ economic pr
 ojections about all MSAs in the US\, reported annually for normal and down
 side scenarios. By combining these projections with comprehensive informat
 ion on bank lending\, we document several findings. First\, banks’ expec
 tations about economic conditions under normal and downside scenarios have
  different determinants (e.g.\, opposite loading on MSA outcomes in the Gr
 eat Recession). Second\, expectations at a given point in time display sub
 stantial dispersion across banks for the same MSA and across MSAs for the 
 same bank. Third\, firms have lower loan growth when their banks are more 
 pessimistic about the downside scenario. The results hold with firm-year f
 ixed effects: for the same firm in a given year\, there is less lending fr
 om more pessimistic banks. Lenders’ pessimism is also associated with hi
 gher interest rates\, which further indicate reductions in credit supply. 
 Moreover\, there are negative real effects on firm-level total borrowing a
 nd capital  expenditures\, especially among firms with limited sources of
  financing\, and on MSA-level output growth. Finally\, banks that were mor
 e pessimistic about the downside pre-COVID have fewer past due loans after
  the pandemic (stronger balance sheets)\, but continue to lend less due to
  persistent pessimism.
LOCATION:Zoom
STATUS:CONFIRMED
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