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Domestic Banking Conditions

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In the last few months, large banks in the U.S. have eased their standards on commercial and industrial (C&I) loans to firms of all sizes. Participants in the Federal Reserve Board’s most recent Senior Loan Officer Opinion Survey attribute the change to increased competition from both bank and nonbank lenders. In fact, standards have been relaxing since 1996:IIIQ (the only exception was 1998:IQ). This trend remains a subject of concern to banking regulators, who are aware of the historical tendency of bank lending practices to become “too loose” just before financial calamities like that recently witnessed in Southeast Asia.

Suggested citation: “Domestic Banking Conditions,” Federal Reserve Bank of Cleveland, Economic Trends, no. 98-06, pp. 17, 06.01.1998.

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