According to a Federal Reserve Senior Loan Officer Opinion Survey, 51% of banks said they had tightened loan standards for larger and medium-sized businesses over the second quarter of 2023. Their most current October issue reports that most have remained relatively unchanged or tightened somewhat further. Respondents cited economic uncertainty, deterioration in bank liquidity, weakened collateral values, reduced risk tolerance, deposit outflows, flagging credit quality, and legislative changes.
All in all, concerned banking institutions are positioning themselves defensively as pressures increase and demand tapers off. Unpaid loans don’t exactly generate profit.