Jonathon Adams Kane lores
Jonathon Adams-Kane
Economist, International Finance and Macroeconomics Research
Capital Flows and Systemic Risk
Dr. Jonathon Adams-Kane is a research economist with the international finance and macroeconomics team at the Milken Institute. His research is mainly on international capital flows and financial stability, with a focus on analyzing structural changes in the international financial system, how crises spread among countries through international banking, and...
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William Lee web
William Lee
Chief Economist
Asia and Banking and Capital Access and Capital Flows and Capital Markets and China and Emerging and Frontier Markets and Europe and Finance and Financial Innovations and Global Economy and Human Capital and Job Creation and Labor and Public Policy and Regulation and Systemic Risk and U.S. Economy
William (Bill) Lee is chief economist at the Milken Institute. He leads the Institute’s effort to develop collaborative policies to improve access to and the functioning of capital markets, strengthen financial stability and the soundness of financial institutions, and foster global macroeconomic, financial, and regulatory conditions to bolster job creation.
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The Slowdown in Bank Lending

By: Jonathon Adams-Kane and William Lee
April 15, 2017

This article originally appeared in the Milken Institute Review.

The sharp slowdown in commercial and industrial lending (C&I, for short) over the past six to nine months — in contrast to an otherwise reasonably comfortable picture of modest growth in the American economy — is worrisome to say the least. Indeed, there is valid concern that the slowdown will threaten the ability of small- to medium-sized businesses to expand their operations and create the jobs needed to absorb an expanding labor force.

C&I lending is an important source of funding for business investment, and therefore a critical factor shaping the outlook for growth. The pause in lending is especially important for smaller enterprises that lack the ability to fund investment by issuing bonds or stock. 

Lee William Adams Kane Jonathon Bank Chart2


lee adams kaneSome perspective is needed here. Total business investment was sputtering well before C&I lending took a dive, sinking well below its post-recovery (2010-12) pace in 2015, despite historically low interest rates. The tepid pace of investment can’t be attributed to the cost or availability of bank loans. Rather, investment slowed because businesses were (and remain) reluctant to add capacity because they face lagging product demand.


Read more in the Milken Institute Review