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Economic Commentary

Loan Quality of Bank Holding Companies

Like most types of depository institutions, commercial banks operate with a high degree of financial leverage; that is, their equity typically is small relative to their total assets. As a result, the loan quality and solvency of commercial banks are inextricably related. For this reason banking regulators, who are charged with preserving the safety and soundness of the nation’s banking system, are concerned with bank loan quality; businesses and households, who supply banks with investable funds, share these concerns.

The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. This paper and its data are subject to revision; please visit for updates.

Suggested Citation

Whalen, Gary. 1983. “Loan Quality of Bank Holding Companies.” Federal Reserve Bank of Cleveland, Economic Commentary 3/21/1983.