Description

In order to understand the influence of banks' perceptions on their lending and thus, contribute to the understanding of the transmission of monetary policy, we studied the role of the Senior Loan Officers Survey (SLOS, hereafter), published quarterly by the Central Bank of Chile. The SLOS accounts for changes in the supply of loans and factors affecting the willingness to lend, as well as variations in the demand for credit and its motivations. By including the SLOS in the analysis, we can go beyond the traditional determinants of credit growth rates that appear in the literature. After controlling for macroeconomic factors and idiosyncratic characteristics of banks, we found that the perceptions reported in the SLOS are statistically and economically significant in explaining the dynamics of credit. This result holds for all market segments, and is robust to several specifications. Moreover, we establish that the impact of credit standards and demand perceptions in credit growth rates is asymmetrical and non-linear, being more significant when conditions are tightening.