photo illustration the silicon valley bank logo is visible on a smartphone with the stock market index in the background on the personal computer on march 14 2023 in rome italy goldman sachs on wednesday lowered its 2023 economic growth forecast citing a pullback in lending from small and mediumsized banks amid turmoil in the broader financial system the firm lowered its growth forecast by 03 percentage points to 12 under expectations that smaller banks will attempt to preserve liquidity in case they need to meet depositor withdrawals leading to a substantial tightening in bank lending standards tighter lending standards could weigh on aggregate demand implying a drag on gdp growth already affected by tightening in recent quarters goldman economists david mericle and manuel abecasis wrote in a note to clients small and mediumsized banks play an important role in the us economy the analysts wrote any lending impact is likely to be concentrated in a subset of small and mediumsized banks banks with less than 250 billion in assets comprise about 50 of us commercial and industrial lending 60 of residential real estate lending 80 of commercial real estate lending and 45 of consumer lending according to the firm while the two recent bank failures silicon valley bank and signature bank account for just 1 of total bank lending goldman noted that lending shares are 20 for banks with a high loantodeposit ratio and 7 for banks with a low share of fdicinsured deposits regulators had seized both of the banks earlier this week and ensured that depositors would regain full access to their funds through the fdics deposit insurance fund many depositors were uninsured due to the 250000 cap on guaranteed deposits the analysts assume that small banks with a low share of fdiccovered deposits will reduce new lending by 40 and that other small banks will reduce new lending by 15 leading to a 25 drag on total bank lending the effect of tightening would have the same impact on demand growth as would an interest rate hike of 25 to 50 basis points they said