The Fed’s quarterly survey of senior credit officials, the first since a series of recent bank failures, showed that 46% of banks tightened credit conditions for a key category of loans to medium and large businesses, against 44.8% in the previous survey. January.
For small businesses, the conditions are a little stricter. And 46.7% of banks said credit conditions are now tighter, up from 43.8% in the last survey.
Banks reported that businesses of all sizes were less in demand for credit than three months ago.
As for consumers, banks said weak demand for credit cards, auto loans and other forms of household lending had returned, but not to the degree seen at the end of last year. Banks have been less willing to provide consumers with installment loans.
Economists, who study the response to the survey, say rising bank stocks that tighten credit standards are gradually leading to a slowdown in economic activity and may be a precursor to a slowdown.
Regulators last week seized struggling First Republic Bank, before colluding with giant JP Morgan Chase & Co to buy most of its assets, in the biggest collapse of a US bank since the financial crisis of 2008.
Last March, America witnessed the collapse of Silicon Valley and Signature Banks, which sent a strong shock to US stock markets as well as Europe and Asia, and raised fears of a spread of banking crises to other parts of the world.
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