What Is the Senior Loan Officer Opinion Survey on Bank Lending Practices (SOSLP)?

The Senior Loan Officer Opinion Survey on Bank Lending Practices (SOSLP) is a voluntary quarterly survey completed by banks. Administered under the aegis of the Federal Reserve Board, the survey is completed in time to be discussed at the quarterly Federal Open Market Committee (FOMC) meetings.

Economists and policymakers such as the FOMC use the surveys to get a clearer picture of credit and lending, which can impact decisions on setting interest rates and discount rates. The survey results are also included in the Fed's reports to Congress on Availability of Credit to Small Businesses, which are produced every five years. In addition, the SOSLP often receives extensive coverage from the business press and in the academic community.

Senior Loan Officer Opinion Survey on Bank Lending Practices (SOSLP) Works

Reflecting the responses of personnel from up to 80 domestic banks and 24 branches and agencies of foreign banks operating in the United States, the SOSLP gathers information on how officials feel about recent and potential policy changes, the standards and terms of the banks' lending practices, the state of business and household demand for loans and other products, and other topics of current interest.

All topics discussed relate to both personal and commercial bank customers. For example, one recent survey focused on changes in the available lines of credit and the use of interest rate floors being set for floating rate loan agreements for businesses. For consumers, topics reflected such issue as loans in areas with falling energy prices and the impact of credit scores on credit card applications.

The Fed first began surveying banks and their lending practices back in 1964. Over the decades, the survey has been adjusted: The number of respondents and questions has decreased and increased. Although authorized to be conducted up to six times a year, there have been only four surveys per year since 1992.

The voluntary Senior Loan Officer Opinion Survey on Bank Lending Practices reflects bank personnel's outlook on loan standards and availability of credit in the future.

The current size and characteristics of the survey respondents have been in effect since 2012. Banks must have at least $2 billion in assets (reduced from $3 billion in 2012), and commercial and industrial loans must represent at least 5% of those assets. Since the Fed aims for geographic diversity, between two and ten banks are included from each Federal Reserve District.

The survey includes 25 questions. They cover practices for the previous three months, but also deal with expectations for the coming quarter and year. While some queries are quantitative, most are qualitative. They have come to cover increasingly timely topics, providing the Fed with insight into Basel III capital requirements, for example, or the impact of the 2008-09 subprime mortgage meltdown.

Real Life Example of Senior Loan Officer Opinion Survey on Bank Lending Practices (SOSLP)

The January 2019 SOSLP addressed changes in the standards and terms on—and demand for—bank loans to businesses and households over the past three months, which generally corresponds to the fourth quarter of 2018. Responses were received from 73 domestic banks and 22 foreign banks.

Regarding loans to businesses, respondents to the January survey indicated that, on balance, banks tightened their standards for commercial real estate (CRE), while terms for commercial and industrial (C&I) loans were basically unchanged. Demand for business loans weakened.

Regarding consumer loans, credit card standards tightened. Otherwise, standards stayed the same for most residential real estate loans and consumer loans.

In looking at the year ahead, banks reported expecting to tighten standards for all categories of business loans—as well as credit card loans and jumbo mortgages—in anticipation a decline in the value of collateral. Demand for most loan types is expected to weaken as well.