Identifying the balance sheet and the lending channels of monetary transmission: A loan-level analysis
We make a novel attempt at comparing the strength of the lending and balance sheet channels of monetary transmission. To make this comparison, we use loan-level data to determine how borrower balance sheets and bank liquidity are related to bank lending decisions and how monetary policy can affect t...
Saved in:
Published in | Journal of banking & finance Vol. 37; no. 8; pp. 2812 - 2822 |
---|---|
Main Authors | , |
Format | Journal Article |
Language | English |
Published |
Amsterdam
Elsevier B.V
01.08.2013
Elsevier Sequoia S.A |
Subjects | |
Online Access | Get full text |
Cover
Loading…
Summary: | We make a novel attempt at comparing the strength of the lending and balance sheet channels of monetary transmission. To make this comparison, we use loan-level data to determine how borrower balance sheets and bank liquidity are related to bank lending decisions and how monetary policy can affect these relationships. The key innovation in this paper is the use of loan-level data. This enables us to measure the independent effects of the two channels and directly account for borrower balance sheets and lender liquidity instead of using proxies. Our results show that the balance sheet channel is the main mechanism through which monetary policy shocks are transmitted to the economy and that the lending channel does not play a significant role. |
---|---|
Bibliography: | ObjectType-Article-2 SourceType-Scholarly Journals-1 ObjectType-Feature-1 content type line 23 |
ISSN: | 0378-4266 1872-6372 |
DOI: | 10.1016/j.jbankfin.2013.04.006 |