Entering text into the input field will update the search result below

Mind The Credit Cycle

Danielle Park, CFA profile picture
Danielle Park, CFA


  • The percentage of US banks tightening their credit to large and medium firms now above 40% – was only seen during the 2020 pandemic, the 2008 financial crisis, the 2001 Dotcom bust, and the 1990-91 recession.
  • As higher interest rates freeze existing home sales, builders have enticed new home sales through discounts and mortgage rate buydowns.
  • Some 60,000 purchase deals for US homes fell through in August, according to the latest report from Redfin.

Hand flipping wooden cube block to change between up and down with percentage sign symbol for increase and decrease financial interest rate and business investment growth from dividend concept.

Dilok Klaisataporn

Bank lending is contracting across world economies. The percentage of US banks tightening their credit to large and medium firms (below since 1990 via Tier 1 Alpha) now above 40% – was only seen during the 2020 pandemic, the 2008 financial crisis, the 2001

This article was written by

Danielle Park, CFA profile picture
Portfolio Manager, financial analyst, attorney, finance author, a regular guest on North American media. Danielle Park is the author of the best selling myth-busting book “Juggling Dynamite: An insider’s wisdom on money management, markets and wealth that lasts,” as well as a popular daily financial blog:www.jugglingdynamite.com Danielle worked as an attorney until 1997 when she was recruited to work for an international securities firm. A Chartered Financial Analyst (CFA), she now helps to manage millions for some of Canada's wealthiest families as a Portfolio Manager and analyst at the independent investment counsel firm she co-founded Venable Park Investment Counsel Inc. www.venablepark.com. For two decades, Danielle has been writing, speaking and educating industry professionals and investors on the risks and realities of investment behaviors. A member of the internationally recognized CFA Institute, Toronto Society of Financial Analysts, and the Law Society of Upper Canada. Danielle is also an avid health and fitness buff.

Recommended For You

Comments (2)

panzer profile picture
@Danielle Park, CFA Excellent article. As Winston Churchill said on the eve of World War One, "The terrible ifs continue to accumulate." This high spec market trading at almost historic high valuations, will have the legs steadily pulled out from under it. It is priced for perfection and as you suggest, it is getting squeezed now in the credit markets steadily. Money must leave the system. The Fed and Jay Powell want things tighter and would not be terribly upset with a smallish recession. We are steadily moving to a third world country environment in so many ways, and typically, these countries have difficult equity markets. I think Jay thumps us for one last quarter point and then it is all downhill. I believe that is the uniform example on interest tightening cycles. After the last hike, for some reason, the equity markets always tend to move way down and often they collapse, no matter how much the Fed is forced to ease. PULLING ON A STRING is the expression that gains vogue.
Great Swami profile picture
Prices are beginning to crack. This may mark the beginning of a 2 year decline… we’ll see!
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.