Banks Assests and Liabilities

Before the financial crisis, banks generated many real estate loans to make easy money. It once accounted for more than 60% of the total loan amount. However, after the financial crisis, real estate loans accounted for less than 55%. The rate of increase in business lending has decreased and it rises again this year. This means that the US economy is good, but real estate loans and personal consumption loans are showing a gradual decline. This is evidence that real estate is slowly cooling down

The following chart displays the percentage of each loan in total loans which is combination of business loans, real estate loans and consumer loans.

The share of real estate loans in total loans exceeded more than 60% during the housing boom before the financial crisis, but declined to 55%. The banks generated more the real estate loans than business loans during the housing boom for easy money. However, that the lending pattern has been changing since the financial crisis in 2008. The share of business loans in total loans is still below the level before the real estate boom which began in 2001.

The following chart shows the monthly changes of each loans in last five years. The monthly growth rate of real estate loans is gradually slowing.

The following chart shows the annual changes for three loans: Business loans, Real Estate loans, and Consumer loans. The growth rate of business loans increases while real estate and consumer loans decreases in 2018.

The following chart shows the business loans.

The following chart shows the real estate loans.

The following chart shows the consumer loans.

R-Codes:

library(Quandl)

library(ggplot2)

library(tseries);library(timeseries);library(xts);library(forecast)

library (quantmod)

library(psych)

library(plotly) #install.package(plotly)

getSymbols(c(‘TOTLL’,’TOTBKCR’,’BUSLOANS’,’REALLN’,’CONSUMER’), src=’FRED’)

Loans<-merge(BUSLOANS,REALLN,CONSUMER)

names(Loans)<-c(‘Business Loans’,’Real Estate Loans’,’Consumer Loans’)

Tot_Loans=BUSLOANS+REALLN+CONSUMER

Per_BUSLOANS=BUSLOANS/Tot_Loans

Per_REALLN=REALLN/Tot_Loans

Per_CONSUMER=CONSUMER/Tot_Loans

Per_Loans<-merge(Per_BUSLOANS,Per_REALLN, Per_CONSUMER)

summary(Per_Loans)

tail(Per_Loans)

dev.off()

Monthly_Loans<-merge(monthlyReturn(BUSLOANS), monthlyReturn(REALLN), monthlyReturn(CONSUMER))

names(Monthly_Loans)<-c(‘Business Loans’,’Real Estate Loans’,’Consumer Loans’)

summary(Monthly_Loans)

tail(Monthly_Loans)

plot(x = last(Monthly_Loans, “5 years”), xlab = “Year”, ylab = “Index”,

main = “Dollar”, col=myColors, screens = 1)

legend(x = “topleft”, legend = c(‘Business Loans’,’Real Estate Loans’,’Consumer Loans’),

lty = 1, col=myColors)

Annual_Loans<-merge(annualReturn(BUSLOANS), annualReturn(REALLN), annualReturn(CONSUMER))

names(Annual_Loans)<-c(‘Business Loans’,’Real Estate Loans’,’Consumer Loans’)

plot(x = last(Annual_Loans, “30 years”), xlab = “Year”, ylab = “Index”,

main = “Dollar”, col=myColors, screens = 1)

legend(x = “topleft”, legend = c(‘Business Loans’,’Real Estate Loans’,’Consumer Loans’),

lty = 1, col=myColors)

plot(x = last(Per_Loans, “30 years”), xlab = “Year”, ylab = “Index”,

main = “Dollar”, col=myColors, screens = 1)

legend(x = “topleft”, legend = c(‘Business Loans’,’Real Estate Loans’,’Consumer Loans’),

lty = 1, col=myColors)

myColors <- c(“red”, “blue”,”black”)

plot(x = last(Loans, “30 years”), xlab = “Year”, ylab = “Index”,

main = “Dollar”, col=myColors, screens = 1)

legend(x = “topleft”, legend = c(‘Business Loans’,’Real Estate Loans’,’Consumer Loans’),

lty = 1, col=myColors)

plot(x = last(Per_Loans, “30 years”), xlab = “Year”, ylab = “Index”,

main = “Dollar”, col=myColors, screens = 1)

legend(x = “topleft”, legend = c(‘Business Loans’,’Real Estate Loans’,’Consumer Loans’),

lty = 1, col=myColors)

# Business Loans

par(mfrow=c(3,1))

plot(last(BUSLOANS, “30 years”), main=”Business Loans”, col=”black”)

barplot(last(monthlyReturn(BUSLOANS), “30 years”), main=”Monthly Changes”, col=”red”)

barplot(last(annualReturn(BUSLOANS), “30 years”), main=” Annual Changes “, col=”blue”)

# Real Estate Loans

par(mfrow=c(3,1))

plot(last(REALLN, “30 years”), main=”Real Estate Loans”, col=”black”)

barplot(last(monthlyReturn(REALLN), “30 years”), main=”Monthly Changes”, col=”red”)

barplot(last(annualReturn(REALLN), “30 years”), main=” Annual Changes “, col=”blue”)

# Consumer Loans

par(mfrow=c(3,1))

plot(last(CONSUMER, “30 years”), main=”Consumer Loans”, col=”black”)

barplot(last(monthlyReturn(CONSUMER), “30 years”), main=”Monthly Changes”, col=”red”)

barplot(last(annualReturn(CONSUMER), “30 years”), main=” Annual Changes “, col=”blue”)

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