Bank loan supply responses to Federal Reserve emergency liquidity facilities

The Federal Reserve injected unprecedented liquidity into banks during the recent crisis through the discount window and Term Auction Facility. We examine the use and effectiveness of these facilities. We find that recipient banks increased their lending overall, both short- and long-term, and in most loan categories. The facilities resulted in enhanced lending at expanding banks and reduced declines at contracting banks. Small banks increased small business lending and large banks increased large business lending. There were no significant changes in loan quality or loan contract terms by either large or small banks.