Study links Fed survey to credit card mail offers
Federal Reserve researchers link the Senior Loan Officer Opinion Survey (SLOOS) with credit card mail offers. Their study finds that quarterly mail volume growth was 18 percent lower when banks reported tightening credit card lending standards, validating both measures as credit supply indicators.
Survey data meets real-world offers
Federal Reserve researchers conducted the first lender-level analysis connecting the Senior Loan Officer Opinion Survey (SLOOS) with credit card mail offers from Mintel Comperemedia.
Using a matched panel of 73 banks from 2000 to 2019, the study reveals that quarterly mail volume growth was 18 percent lower when banks reported tightening credit card lending standards.
This robust relationship holds even when controlling for credit demand indicators.
Furthermore, SLOOS responses on credit limits and interest rate spreads show strong correlations with the terms observed in these mail offers.
These findings mutually validate both SLOOS and mail offer data as reliable and informative credit supply indicators, largely insulated from demand-side variations.
The challenge of credit supply metrics
Measuring changes in credit supply is inherently challenging, as borrowing prices and quantities reflect both supply and demand dynamics.
The multi-dimensional nature of credit terms further complicates the search for consistent indicators.
The Federal Reserve's SLOOS addresses this by directly surveying loan officers on underwriting policies and perceived demand.
Separately, credit card mail offer volume provides an action-based, quantifiable metric of credit supply fully controlled by banks.
This market, representing $1.3 trillion in unsecured consumer borrowing, serves as an ideal laboratory for assessing credit supply indicators.
Validating key credit signals
The study provides crucial validation for two key credit supply indicators, confirming their reliability in reflecting actual lending behavior.
This lender-level analysis strengthens understanding of how banks' stated policies translate into observable actions.
For policymakers, this consistency enhances confidence in using both SLOOS and mail offer data to gauge credit conditions and inform monetary policy.