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NBER Working Papers and Publications
|October 2011||Improving Our Ability to Monitor Bank Lending|
with Simon Gilchrist, Gretchen C. Weinbach, Egon Zakrajšek
in Risk Topography: Systemic Risk and Macro Modeling, Markus Brunnermeier and Arvind Krishnamurthy, editors
In this chapter, we highlight some of the difficulties that arise in measuring accurately the provision of credit by the banking sector during an economic downturn, such as the one experienced during the recent financial crisis. Specifically, we argue that existing bank regulatory reports provide insufficient detail to monitor banks' lending activities accurately. We then outline a conceptual framework for measuring bank lending that could be used to improve the existing information on banks' on-balance-sheet lending activities and the equally-important information on banks' off-balance-sheet credit line provision activities. We recognize that the literal adoption of our framework would increase banks' reporting burden. Our aim, rather, is to provide a detailed description of the kind of d...