The Federal Reserve Board published a FEDS Note using microdata from the Senior Loan Officer Opinion Survey (SLOOS) to examine what drives banks’ expectations for future lending standards and how those expectations translate into subsequent changes in standards. The analysis introduces an Expected Credit Supply Index (E-CSI), designed to capture shifts in banks’ expected credit supply that are not explained by observable macroeconomic forecasts, realized macro-financial conditions, or bank characteristics. The note draws on January SLOOS “outlook” questions that ask banks how they expect standards, demand, and asset quality to evolve over the coming year, and studies a panel covering 2018 to 2026. Regressions incorporate year-ahead consensus forecasts (including GDP growth, unemployment changes, and T-bill yield changes), realized macro-financial variables (including changes in the real federal funds rate and the excess bond premium), bank balance-sheet and performance measures, and contemporaneous SLOOS information on Q4 standards and expected demand and asset quality. Results suggest outlooks for lending standards are only partially explained by these inputs; the residual component is aggregated into the E-CSI, which shows meaningful cross-bank dispersion and, in aggregate, indicates expectation deviations such as additional easing in 2021 and additional tightening in 2023 beyond what the model would predict. Both the raw outlook measure and the E-CSI help predict subsequent quarters’ reported standards, but the E-CSI’s predictive relationship appears to persist longer through the year, especially for business loans.
Federal Reserve Board 2026-02-23
Federal Reserve Board research introduces an Expected Credit Supply Index to isolate shocks to banks’ lending standards expectations
The Federal Reserve Board published a FEDS Note analyzing banks' expectations for future lending standards using microdata from the Senior Loan Officer Opinion Survey. The study introduces an Expected Credit Supply Index (E-CSI) to capture shifts in expected credit supply not explained by macroeconomic forecasts or bank characteristics. Findings indicate that the E-CSI predicts deviations in lending standards, with notable easing in 2021 and tightening in 2023, and its predictive power persists longer than raw outlook measures, especially for business loans.