Heterogeneous bank lending responses to monetary policy: new evidence from a real-time identification

John Bluedorn, Christopher Bowdler () and Christoffer Koch

No 1404, Working Papers from Federal Reserve Bank of Dallas

Abstract: We present new evidence on how heterogeneity in banks interacts with monetary policy changes to impact bank lending, at both the bank and U.S. state levels. Using an exogenous policy measure identified from narratives on FOMC intentions and real-time economic forecasts, we find much stronger dynamic effects and greater heterogeneity in U.S. bank lending responses than that found in previous research based on realized federal funds rate changes. Our findings suggest that studies using realized monetary policy changes confound monetary policy?s effects with those of changes in expected macrofundamentals. In fact, estimates from identified monetary policy changes lead to a reversal of U.S. states? ranking by credit?s sensitivity to policy. We also extend Romer and Romer (2004)?s identification scheme, and expand the time and balance sheet coverage of the U.S. banking sample.

Keywords: Monetary Transmission; Lending Channel; Monetary Policy Identification; Banking (search for similar items in EconPapers)
JEL-codes: E44 E50 G21 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2014-03-01
New Economics Papers: this item is included in nep-ban, nep-cba, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Heterogeneous Bank Lending Responses to Monetary Policy: New Evidence from a Real-Time Identification (2017)
Working Paper: Heterogeneous Bank Lending Responses to Monetary Policy: New Evidence from a Real-time Identification (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:feddwp:1404

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DOI: 10.24149/wp1404

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