{
  "title": "U.S. Bank Behavior in the Wake of the 2007–2009 Financial Crisis",
  "publication": "IMF Working Papers, May 1, 2010",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/u-s-23907",
  "canonical": "https://www.imf.org/en/publications/wp/issues/2016/12/31/u-s-23907",
  "overlayPath": "/en/publications/wp/issues/2016/12/31/u-s-23907/index.md",
  "summary": "The paper examines the slowdown of lending by large U.S. banks over the period 2007Q3 - 2009Q2, focusing on: (i) whether capital or liquidity was the binding constraint; (ii) factors influencing banks’ decision to hold capital; and (iii) their pricing behavior.",
  "sections": [
    {
      "heading": "Summary and Key Findings",
      "content": "- Study period: 2007Q3 - 2009Q2.\n- Primary research questions:\n  - Whether capital or liquidity was the binding constraint on lending.\n  - Factors influencing banks’ decision to hold capital.\n  - Banks’ pricing behavior during the episode.\n- Main findings:\n  - Capital, rather than liquidity, constrained lending.\n  - Banks increased capital by slowing lending and raising profit margins.\n  - Banks did not fully pass through the Federal Reserve’s interest rate cuts to borrowers.\n  - Banks optimally choose capital based on the expected future demand for loans and the marginal cost of capital."
    },
    {
      "heading": "Data and Methodology",
      "content": "- Data frequency: quarterly.\n- Sample: largest U.S. banks (quarterly data for the largest U.S. banks).\n- Empirical focus: disentangling capital versus liquidity constraints, determinants of capital holdings, and loan pricing responses."
    },
    {
      "heading": "Policy-Relevant Implications and Behavioral Mechanisms",
      "content": "- Behavior under stress:\n  - Lending contraction was driven by capital considerations.\n  - Banks adjusted lending supply and loan pricing to rebuild or preserve capital.\n- Pricing behavior:\n  - Evidence of incomplete pass-through of Federal Reserve interest rate cuts, implying elevated lender margins during the crisis period.\n- Capital policy considerations:\n  - Optimal capital choices are forward-looking—dependent on expected future loan demand and marginal cost of capital—suggesting that regulatory design and crisis interventions should account for forward-looking bank responses.\n\n---\n\n Content in this bundle\n\n- wp10131 - References\n  - wp10131 - References (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp10131 - References (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/u-s-23907"
    }
  ],
  "bullets": [
    "[Markdown version](/en/publications/wp/issues/2016/12/31/u-s-23907/index.md)",
    "[Structured JSON version](/en/publications/wp/issues/2016/12/31/u-s-23907/index.json)",
    "[Bundle manifest](/en/publications/wp/issues/2016/12/31/u-s-23907/bundle-manifest.json)",
    "Authors: Dalia S Hakura, Ralph Chami, Thomas F. Cosimano, Adolfo Barajas",
    "Published: May 1, 2010",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781455201143.001",
    "Study period: 2007Q3 - 2009Q2.",
    "Primary research questions:",
    "Main findings:",
    "Data frequency: quarterly.",
    "Sample: largest U.S. banks (quarterly data for the largest U.S. banks).",
    "Empirical focus: disentangling capital versus liquidity constraints, determinants of capital holdings, and loan pricing responses.",
    "Behavior under stress:",
    "Pricing behavior:",
    "Capital policy considerations:",
    "**_wp10131 - References**"
  ],
  "related": [
    {
      "title": "_wp10131 - References",
      "role": "document",
      "sourceUrl": "https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2010/_wp10131.pdf",
      "summary": {
        "path": "/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2010/_wp10131.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2010/_wp10131.pdf",
        "mime": "application/pdf"
      }
    }
  ],
  "alternates": {
    "markdown": "/en/publications/wp/issues/2016/12/31/u-s-23907/index.md",
    "json": "/en/publications/wp/issues/2016/12/31/u-s-23907/index.json",
    "bundleManifest": "/en/publications/wp/issues/2016/12/31/u-s-23907/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-18T09:38:05.758Z"
}