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Journal Article
Do Credit Supply Shocks Constrain Employment Growth of Small and Medium-Sized Enterprises?
Baslandze, Salomé; Minoiu, Camelia; Penciakova, Veronika; Willis, Jonathan L. (2023-09-25)
Small and medium-sized enterprises (SMEs) made outsized contributions to net employment growth during the pandemic recession and recovery. However, credit conditions have tightened significantly during the past year and might hinder growth for small firms going forward. Using data on bank lending to small businesses and employment growth, we estimate that a tightening in bank credit supply of 1 percentage point is associated with an 11 percent decline in SMEs' net job creation rate. This estimate indicates that a bank credit tightening about one-third the size of the tightening observed ...
Policy Hub , Volume 2023 , Issue 5

Working Paper
Evergreening
Paul, Pascal; Faria-e-Castro, Miguel; Sanchez, Juan M. (2023-01)
We develop a simple model of relationship lending where lenders have incentives for evergreening loans by offering better terms to firms that are close to default. We detect such lending behavior using loan-level supervisory data for the United States. Banks that own a larger share of a firm's debt provide distressed firms with relatively more credit at lower interest rates. Building on this empirical validation, we incorporate the theoretical mechanism into a dynamic heterogeneous-firm model to show that evergreening affects aggregate outcomes, resulting in lower interest rates, higher ...
Working Papers , Paper 2021-012

Working Paper
Bank Financing of Global Supply Chains
Alfaro, Laura; Presbitero, Andrea F.; Minoiu, Camelia; Brussevich, Mariya (2025-05-19)
Finding new international suppliers is costly, so most importers source inputs from a single country. We examine the role of banks in mitigating trade search costs during the 2018–19 US-China trade tensions. We match data on shipments to US ports with the US credit register to analyze trade and bank credit relationships at the bank-firm level. We show that importers of tariff-hit products from China were more likely to exit relationships with Chinese suppliers and find new suppliers in other Asian countries. To finance their geographic diversification, tariff-hit firms increased credit ...
FRB Atlanta Working Paper , Paper 2025-4

Discussion Paper
The Adverse Effect of “Mandatory” Flood Insurance on Access to Credit
Blickle, Kristian S.; Engelman, Katherine; Linnemann, Theo; Santos, João A. C. (2022-05-23)
The National Flood Insurance Program (NFIP) was designed to reduce household and lender flood-risk exposure and encourage lending. In this post, which is based on our related study, we show that in certain situations the program actually limits access to credit, particularly for low-income borrowers—an unintended consequence of this well-intentioned program.
Liberty Street Economics , Paper 20220523

Working Paper
Evergreening
Paul, Pascal; Faria-e-Castro, Miguel; Sanchez, Juan M. (2023-08)
We develop a simple model of concentrated lending where lenders have incentives for evergreening loans by offering better terms to firms that are close to default. We detect such lending behavior using loan-level supervisory data for the United States. Banks that own a larger share of a firm’s debt provide distressed firms with relatively more credit at lower interest rates. Building on this empirical validation, we incorporate the theoretical mechanism into a dynamic heterogeneous-firm model to show that evergreening affects aggregate outcomes, resulting in lower interest rates, higher ...
Working Papers , Paper 2021-012

Working Paper
Industrial Composition of Syndicated Loans and Banks’ Climate Commitments
Hale, Galina; Meisenbacher, Brigid C.; Nechio, Fernanda (2024-07-30)
In the past two decades, a number of banks joined global initiatives aimed to mitigate climate change by “greening” their asset portfolios. We study whether banks that made such commitments have a different emission exposure of their portfolios of syndicated loans than banks that did not. We rely on loan-level information with global coverage combined with country-industry information on emissions. We find that all banks have reduced their loan-emission exposures over the last 8 years. However, we do not find differences between banks that did and those that did not signal their ...
Working Paper Series , Paper 2024-23

Journal Article
Loan Evergreening: Recent Evidence from the U.S.
Paul, Pascal; Faria-e-Castro, Miguel; Sanchez, Juan M. (2022-09-26)
Banks may have incentives to keep lending to firms to avoid losses on past loans to those firms.
Economic Synopses , Issue 26 , Pages 1-2

Working Paper
Persistent Effects of the Paycheck Protection Program and the PPPLF on Small Business Lending
Dufresne, Lora; Spiegel, Mark M. (2024-08-07)
Using bank-level U.S. Call Report data, we examine the longer-term effects of the Paycheck Protection Program (PPP) and the PPP Liquidity Facility on small business (SME) lending. Our sample runs through the end of 2023H1, by which time almost all PPP loans were forgiven or repaid. To identify a causal impact of program participation, we instrument based on historical bank relationships with the Small Business Administration and the Federal Reserve discount window prior to the onset of the pandemic. Elevated bank participation in both programs was positively associated with a substantial ...
Working Paper Series , Paper 2024-26

Report
Bank Lending to Private Equity and Private Credit Funds: Insights from Regulatory Data
Levin, John; Malfroy-Camine, Antoine (2025-02-05)
In this note, we examine large banks’ lending to private equity (PE) and private credit (PC) funds. Using a manual matching algorithm, we estimate that large banks’ total loan commitments to PE/PC fund sponsors are approximately $300 billion, or 14 percent of their total loan commitments to non-bank financial institutions, as of 2023, up from around $10 billion, or about one percent, in 2013.
Supervisory Research and Analysis Notes , Issue 2025-02 , Pages 18

Working Paper
Evergreening
Paul, Pascal; Faria-e-Castro, Miguel; Sanchez, Juan M. (2022-07)
We develop a simple model of relationship lending where lenders have incentives for evergreening loans by offering better terms to less productive and more indebted firms. We detect such lending behavior using loan-level supervisory data for the United States. Low-capitalized banks systematically distort firms’ risk assessments to window-dress their balance sheets. To avoid further reductions in their capital ratios, such banks extend relatively more credit to underreported borrowers. We incorporate the theoretical mechanism into a dynamic heterogeneous-firm model to show that evergreening ...
Working Papers , Paper 2021-012

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