Credit conditions and economic growth: Recent evidence from US banks

- Growth of post-crisis US bank lending has been dismal.
- We apply a new technique to parse the supply and demand of bank loan flows.
- The results imply fairly robust loan demand and lackluster supply in recent years.
- As such, loan supply appears to have exerted a notable drag on economic activity.

What explains the slow recovery of US bank lending since the financial crisis? We apply a new technique to disentangle loan supply and demand shocks. Lackluster supply in recent years played a key role against the backdrop of recovering demand.