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Bank Lending Standards

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Banks face a delicate trade-off in making loans. On the one hand, if they lend only to undeniably safe and secure creditors, then lending, profits, and perhaps economic growth will suffer. If they relax their standards and lend to a broader spectrum of creditors, then defaults may increase, threatening profits from the other side.


Suggested citation: “Bank Lending Standards,” Federal Reserve Bank of Cleveland, Economic Trends, no. 96-07, pp. 16-17, 07.01.1996.

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