We examine the lending behaviors of US commercial banks around the 2008 financial crisis. Before the crisis, risky banks showed higher lending ratios, but relatively sound banks (prudent banks) showed more aggressive lending behaviors and higher excess loan growth rates than risky banks. Specifically, prudent banks showed higher excess growth rates of loans to households than risky banks.Prudent banks also approved more mortgage loan applications than risky banks did. Such aggressive lending led to higher non-performing loan ratios and lower profitability over time. Analyses using bank attributes to form a prudence index confirm the results. 

Key words: Lending behavior, Risk Taking, Bank Performance, Financial Crisis
JEL: G01, G21, G28​