Since the onset of the financial crisis in 2007, the various explanatory elements pertaining to the banks’ cost of funds and balance sheet constraints (represented by the red, orange and yellow bars in the chart) have indeed contributed to tighter lending standards.
However, it is obvious from the chart that the role of these explanatory factors is secondary, while it is banks’ risk perceptions (represented by the blue and green bars) that have played a key role. Risk perceptions pertaining to the industry- or firm-specific outlook in particular have contributed to more stringent lending standards.