Title

Identifying the balance sheet and the lending channels of monetary transmission: A loan-level analysis

Keywords

Balance sheet channel; Lending channel; Loan-level data; Monetary transmission

Abstract

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. © 2013 Elsevier B.V.

Publication Date

8-1-2013

Publication Title

Journal of Banking and Finance

Volume

37

Number of Pages

2812-2822

Document Type

Article

Personal Identifier

scopus

DOI Link

https://doi.org/10.1016/j.jbankfin.2013.04.006

Socpus ID

84878648887 (Scopus)

Source API URL

https://api.elsevier.com/content/abstract/scopus_id/84878648887

ISSN

8

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