Why is it important?
The Senior Loan Officer Opinion Survey on Bank Lending Practices is a survey conducted by the Federal Reserve to gain insight into bank lending practices and conditions. The voluntary survey polls up to 80 large domestic banks and 24 branches of international banks. The Federal Reserve generally conducts the survey quarterly, timing it so that results are available for the January/February, April/May, August, and October/November meetings of the Federal Open Market Committee. The survey often includes questions on one or two other topics of current interest.
The Federal Reserve Senior Loan Officer Opinion Survey is important because it provides insight into bank lending practices and conditions, which can affect the availability and cost of credit for businesses and households1. The survey also helps the Federal Open Market Committee (FOMC), which is the monetary policy-making body of the Federal Reserve, to make decisions on setting interest rates and discount rates, which can influence the economic activity and inflation
The July 2023 Senior Loan Officer Opinion Survey is a report issued by the Federal Reserve that summarizes the changes in bank lending practices and demand for loans in the second quarter of 20231. The survey covers loans to businesses and households, and also includes questions on topics of current interest, such as the economic outlook and the impact of the COVID-19 pandemic2. The main findings of the survey are:
- Banks tightened standards and terms on auto loans, credit card loans, and other consumer loans amid uncertain economic conditions and reduced consumer spending34.
- Banks reported weaker demand for most categories of consumer loans, except for residential mortgages, which saw stronger demand due to low interest rates and high home prices34.
- Banks eased standards and terms on commercial and industrial (C&I) loans to large and middle-market firms, but tightened them for small firms, reflecting differences in credit quality and loan performance1.
- Banks reported stronger demand for C&I loans from large and middle-market firms, but weaker demand from small firms, due to varying needs for liquidity and working capital1.
- Banks eased standards on most categories of commercial real estate (CRE) loans, except for construction and land development loans, which saw tighter standards due to higher risk and lower profitability1.
- Banks reported weaker demand for all categories of CRE loans, reflecting reduced activity and occupancy in the commercial real estate sector due to the pandemic1.
You can read the full report here: For release at 2:00 p.m. ET July 31, 2023 TO … – Federal Reserve Board