FR2018_20210528_omb_B

Supporting Statement Part B for the
Senior Loan Officer Opinion Survey on Bank Lending Practices
(FR 2018; OMB No. 7100-0058)
Summary
For all information collections that involve surveys or require a statistical methodology,
the Board of Governors of the Federal Reserve System (Board) is required to provide a complete
justification and explanation of the use of such a methodology. For collections that employ
surveys without such a methodology, the Board should be prepared to justify its decision not to
use statistical methods in any case where such methods might reduce burden or improve
accuracy of results.
Background
The Federal Reserve initiated a survey on bank lending practices in 1964. Until 1981, it
was conducted quarterly at 120 respondent banks and consisted of 22 standard questions, seeking
qualitative information with respect to changes in bank lending practices in the th ree months
preceding the survey date. The survey’s original questions dealt with perceived changes in
business loan demand, willingness to make business loans, various non-rate aspects of business
loan pricing, and willingness to extend consumer, mortgage, and certain other types of loans.
In 1981, the number of respondents was decreased by half, the number of core questions
was reduced to six, and a provision was made to include additional questions in each survey that
would address current topics on bank lending practices. In 1984, the authorized frequency was
increased from four to eight times a year, most of the remaining core questions were dropped,
and the survey came to consist mainly of questions focusing on one or more topics of current
interest. For example, banks were queried about the market for interest rate swaps, the market for
business loan sales and participations, business lending to middle market firms, and the effects of
tax changes on bank lending. In 1987, the Federal Reserve reduced th e authorized frequency
from eight to six times a year after determining that this would reduce the burden on respondents
without compromising the Federal Reserve’s ability to keep abreast of important banking
developments. 1
In August 1990, the respondent panel was enlarged to include 18 of the largest U.S.
branches and agencies of foreign banks. In November 1994, the Board increased the number of
foreign banks surveyed to 24 to make the foreign bank coverage more thorough and to rectify an
under-representation of branches and agencies of European banks.
In May 2012, the Federal Reserve reduced the minimum asset size for panel institutions
from $3 billion to $2 billion and added 20 domestically chartered commercial banks with $2 to
$10 billion in total assets to the authorized panel. The expanded panel provided deeper coverage

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The survey was conducted five times in 1985, 1986, and 1987, four times in 1988 and 1989, five times in 1990,
and six times in 1991. Since that time, it has been conducted four times every year, except for 1998 and 2001, in
which the survey was conducted five times.

of commercial real estate loans and small business lending, as well as a more comprehensive
picture of differences in lending conditions at the largest banks and regional banks.
The information obtained from the survey provides valuable insights on credit market and
banking developments and is helpful in the formulation of monetary policy. Information from the
survey is reported regularly to the Board and to the Federal Open Market Committee (FOMC) as
an official memorandum to FOMC participants and in other internal briefing materials. This
information has been particularly valuable in the recent period as it has provided the Federal
Reserve with insight into the effects of the coronavirus disease 2019 (COVID-19) crisis and the
subsequent potential gradual economic recovery on the availability of credit to households and
businesses. The survey has also attracted considerable attention from the business and financial
press and is used in academic research on banking and macroeconomic activity. 2 Aggregate
survey responses have been used to study the effects of the more stringent international capital
requirements commonly referred to as Basel III. 3 The results are also included in the Board’s
reports to Congress on Availability of Credit to Small Businesses, which are produced every five
years pursuant to section 2227 of the Economic Growth and Regulatory Paperwork Reduction
Act of 1996. The survey results have also been useful in enabling the Federal Reserve to keep
abreast of complex banking developments that have evolved over time, and analysis based on the
survey results often appears in Federal Reserve publications as the Monetary Policy Report,
which is submitted to Congress semiannually, and the recently inaugurated Financial Stability
Report.
In the last several years, the survey has provided critical information on a number of
important banking topics. Recent special questions have addressed issues in rapidly changing
credit markets banks’ lending terms and outlook for commercial real estate lending standards and
demand, banks’ assessments of the levels of their lending standards relative to longer-term
norms, and banks’ expectations about changes in asset quality and credit standards over the
coming year. Regarding lending to households, the survey has provided valuable information on
timely topics including the asset quality of consumer loans in areas most affected by falling
energy prices, and the likelihood of approving credit card applications by borrowers’ credit
score. In addition, the survey helped shed light on broader issues, such as the relationship
between banks’ lending policies and movements in the yield curve for Treasury securities.
Universe and Respondent Selection
The FR 2018 panel comprises domestically chartered commercial banks and U.S.
branches and agencies of foreign banks. In addition, the Federal Reserve has the option to survey

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Examples of academic research include William F. Bassett III, Mary Beth Chosak, John C. Driscoll, and Egon
Zakrajsek (2014). “Changes in Bank Lending Standards and the Macroeconomy,” Journal of Monetary Economics,
62(1), pp. 23-40, and Jose M. Berrospide and Rochelle M. Edge (2011). “The Effects of Bank Capital on Lending:
What Do We Know, and What Does it Mean?” International Journal of Central Banking, 6(4), pp. 5-54.
3
Examples of Basel III research include BIS (2010). “Assessing the Macroeconomic Impact of the Transition to
Stronger Capital and Liquidity Requirements,” Macroeconomic Assessment Group. Basel, Switzerland: Bank for
International Settlements, and Angela Maddaloni and Jose-Luis Peydro (2011). “Bank Risk-Taking, Securitization,
Supervision, and Low Interest Rates: Evidence from U.S. and Euro Area Lending Standards,” Review of Financial
Studies, 24(6), pp. 2121-2165 (https://academic.oup.com/rfs/article/24/6/2121/1587432).

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other types of respondents (such as other depository institutions, bank holding companies, or
other financial entities) in addition to the current panel.
Domestically Chartered Commercial Banks. Since 2012, the Federal Reserve has tried
to maintain a panel of 80 such banks, the authorized size (from 1981 to 2012, the Federal
Reserve tried to maintain a panel of 60 insured, domestically chartered commercial banks). To
ensure adequate geographic coverage, the survey panel of domestic banks spans all Federal
Reserve Districts, while balancing the need to keep it heavily weighted toward the largest banks.
When the largest banks in a District are not among its respondents, it is generally because the
banks are specialized (for example, credit card banks) or because they are part of a holding
company that is already represented in another District. The presence of the largest banks in the
survey is critical, as they play an important role in developing and practicing new banking
techniques. However, the panel also includes a fair number of large and medium-size regional
banks, which allows for a greater diversity of responses and provides a broader view of the
banking system.
As of March 31, 2020, the panel of domestic respondents contained 77 banks, 32 of
which had assets of $50 billion or more. The assets of the panel banks totaled $14.2 trillion and
accounted for about 71 percent of the $19.9 trillion in total assets of all domestically chartered
institutions.
Selection Criteria for the Domestic Bank Panel. In selecting the panel, the Federal
Reserve generally imposes three constraints. The first is size: Banks that have less than $2 billion
of total assets or for which commercial and industrial (C&I) loans are less than 5 percent of total
assets are eliminated from consideration, with a few exceptions. 4 The second is geographic
diversity: Between four and eleven banks are included from each District. 5 The third is mutual
independence: With some exceptions, a bank is eliminated from consideration if it is a subsidiary
of a bank holding company that is already represented in the panel, because its responses would
likely not be independent of those of the related bank already providing responses. 6
U.S. Branches and Agencies of Foreign Banks. The Federal Reserve tries to maintain a
panel size of 24, the authorized size. As of March 2020, the panel included 22 institutions, 21 of
which are located in the New York District. In March 2020, the share of C&I loans held by
respondent U.S. branches and agencies of foreign banks ($280.2 billion) relative to that held by
the universe of such institutions ($408.4 billion) was 69 percent, up from 66 percent in June
2017. To keep the panel representative with respect to the parent banks’ countries of origin going
forward, branches and agencies would continue to be added to the panel based on the location of
the parent bank as well as size.

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As of March 31, 2020, five banks had C&I loans that were less than 5 percent of total assets.
Two panel members have main offices in Federal Reserve Districts that are different from those that collect their
survey responses because in these cases the respondent bank (not the head office) is considered the primary lending
bank.
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In cases where two banks under a common parent company are included in the panel, the Federal Reserve has
made efforts to determine that the banks’ responses to survey questions are independent.
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Optional Panel. The panels of large domestically chartered commercial banks and U.S.
branches and agencies of foreign banks would be appropriate for most survey topics. In some
situations, however, panels based on alternative criteria may be more appropriate or may provide
useful additional information. Consequently, the Federal Reserve has the op tion to survey other
types of respondents (such as other depository institutions, bank holding companies, or other
financial entities) in addition to the current panel. For example, it may be useful to survey
institutional loan investors to gain a better understanding of how that part of the syndicated loan
market works. This option enhances the potential scope and utility of the survey and is consistent
with the FR 2023. Also consistent with the FR 2023, the surveys of optional panels would be
conducted either by Federal Reserve Bank staff or Board staff, as appropriate.
Procedures for Collecting Information
This voluntary survey is conducted with a senior loan officer at each respondent bank,
generally through an electronic submission, up to six times a year. Senior staff at the Reserve
Banks with knowledge of bank lending practices email the survey questions to a senior loan
officer at each respondent bank. Federal Reserve Banks conduct follow-up telephone interviews
with institutions that did not respond or if the responses require further information. The Reserve
Banks electronically transmit survey responses to the Federal Reserve Board, where the data are
tabulated and summarized in a public release, which is made available on the Federal Rese rve’s
website. The survey results also are discussed in annual Federal Reserve Bulletin articles
Methods to Maximize Response
A respondent may decline to answer a particular question when answering would entail
excessive burden. Experience has shown that only a small number of respondents decline to
answer any particular question. Response rates overall have been high and resulted in adequate
and informative answers.

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