Working Paper

Who Provides Credit in Times of Crisis? Evidence from the Auto Loan Market

Abstract: We examine the contribution of different lending channels to the auto loan market in times of crisis. Specifically, we explore lending from traditional banks, credit unions, and finance companies (nonbanks) over the past two decades, with an emphasis on the Great Recession and the COVID-19 pandemic. We find that banks provided weak support during the pandemic, thus losing market share and continuing the trend that emerged following the Great Recession. Nonbank market share during this period grew most significantly for subprime borrowers and in counties with stronger bank dependence. Survey evidence suggests that a tightening in banks’ lending standards may have contributed to this trend. These findings contrast with the experience during the Great Recession, when banks contributed the most resilient credit to the auto loan market. Our paper highlights nonbanks’ increasing role in the auto loan market in times of crisis, particularly for the subprime segment.

Keywords: nonbanks; auto loans; financial crisis; consumer credit;

JEL Classification: G01; G21; G23; L62;

https://doi.org/10.21799/frbp.wp.2025.06

Bibliographic Information

Provider: Federal Reserve Bank of Philadelphia

Part of Series: Working Papers

Publication Date: 2025-02-05

Number: 25-06