Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
Upside of Inequality Oxford Unintended Consequences

AI Summary. Commercial bank loan growth paused amid high interest rates and a regional banking panic, then resumed as rates declined, normalizing toward a pre-pandemic pace though slower than its earlier peak. Private credit blunted the impact of tighter monetary policy, research suggests, by both competing with public debt offerings and lending to companies that struggle to borrow from banks.

Joseph Wang Fed Guy Blog
Date Posted:
Is Database:
Database

.@FedGuy12 notes private credit has “blunted the impact of tightening monetary policy by actively lending to a wide range of businesses,” and that bank credit is “normalizing towards a pre-pandemic pace.”

Is bank loan growth resuming as interest rates decline?

Core argument: Commercial bank loan growth paused last year amid high interest rates and the regional banking panic, and has steadily resumed as rates have declined, normalizing toward a pre-pandemic pace rather than the rapid 2022 rate.

Commercial bank loan growth paused last year amidst high rates and the regional banking panic but looks to resume just as economic growth concerns are surfacing. Private credit has blunted the impact of tightening monetary policy by actively lending to a wide range of businesses. Research suggests private credit has grown by both competing with public debt offerings and by willing to offer credit to companies who have difficulty borrowing from banks. The surge in private lending helped fill the void created by the decline in bank lending. However, bank lending has steadily resumed in recent months as interest rates have declined. Loan growth is not as rapid as 2022, but appears to be normalizing towards a pre-pandemic pace.

Takeaways by Macro Roundup® AI

  1. Commercial bank loan growth paused last year amid high interest rates and the regional banking panic, and has steadily resumed as rates have declined, normalizing toward a pre-pandemic pace rather than the rapid 2022 rate.
  2. Private credit blunted the impact of tighter monetary policy by lending actively to a wide range of businesses, helping fill the void created by the decline in bank lending.
  3. Research suggests private credit has grown both by competing with public debt offerings and by extending credit to companies that have difficulty borrowing from banks.

Related Articles:

  • Private Credit Growth and Monetary Policy Transmission — Private credit — direct lending to businesses by nonbank institutions — accounts for about 15% of private companies' outstanding debt, with volumes comparable to leveraged loans and high-yield corporate bonds. The authors find monetary policy transmission through private credit may be muted relative to bank lending and public bond markets, given resilient credit supply.
  • Where Are All the Defaults? — One explanation for subdued high-yield bond spreads is that the lowest-quality borrowers, those most likely to default, have migrated from high-yield markets into private credit. Moody's reports the number of issuers with its lowest speculative-grade ratings has fallen, and that 62% of its rated universe is rated single-B or below.
  • Economic Effects of Tighter Lending by Banks — Bank lending standards tightened to a degree previously seen only during the 2008 financial crisis and the onset of the COVID-19 pandemic, with the tightening beginning well before the bank collapses and affecting businesses of all sizes. The analysis attributes about 23pp of the tightening to credit supply shocks and about 22pp to lending standards responding to broader economic conditions.
Showing 218 database articles primarily about Business Cycle