R. Alton Gilbert and Mack Ott examine the reasons for the unusual pattern of business loans at large commercial banks during the current economic expansion. The authors find that, both before and after the first half of 1984, business loans were growing at rates similar to those for comparable periods in earlier economic expansions. A surge of business loans at large commercial banks during the first half of 1984, however, raised such loans above the level that would have been expected on the basis of past cyclical patterns. Among the possible explanations for the surge in business loans in the first half of 1984 is the unusually rapid rise in the pace of economic activity during that period; this could have induced an unusually large rise in credit demand by business firms. Gilbert and Ott do not find empirical support for this explanation. Instead, they conclude that the most important factor contributing to the surge of business loans was bank financing of corporate mergers and leveraged buyouts. Unlike the other explanations, both the timing and magnitude of the unusually large amount of mergers and buyouts in early 1984 match up with the surge of business loans.