The author also finds support in the data for resolving troubled banks quickly, limiting the concentration of the banking sector, and raising minimum capital ratios. Policy Implications This report examines the lending behavior of banks of different sizes and financial health regarding their lending activities to both small and large businesses after the financial crisis.
Loan growth was greater for small business loans prior to the crisis, and the decline in lending was greater for small business loans during and after the crisis.
Post-crisis, small business lending by troubled banks remained weak, averaging growth of only about 2 percent per year while total business lending grew by 4 percent per year.
Both total and small business lending contracted at troubled banks by more than 5 percent per year during the crisis years, but continued to expand at healthy banks by more than 5 percent per year.
The decline in the number of banks—including the drop in community banks—during and after the crisis makes it difficult to determine if banks have continued the tight-credit policies of —, or if they have eased them.
Federal Financial Institution Examination Council to evaluate whether bank lending policies toward small businesses returned to pre-crisis levels after the financial crisis years of — Hence, it appears that there has been little in the way of a recovery in the small business loan market, but a somewhat more robust recovery in the market for total business loans.
The amount of small business loan originations plummeted by more than half during the crisis and has seen only a very limited recovery post-crisis, leaving small business loan originations down 40 percent from pre-crisis levels.