Nonbanks, Banks, and Monetary Policy: U.S. Loan-Level Evidence since the 1990s

David Elliott, Ralf Meisenzahl, Jose-Luis Peydro and Bryce Turner

VfS Annual Conference 2020 (Virtual Conference): Gender Economics from Verein für Socialpolitik / German Economic Association

Abstract: We show that nonbanks (funds, shadow banks, fintech) reduce the effectiveness of tighter monetary policy on credit supply and the resulting real effects, and increase risk-taking. For identification, we exploit exhaustive US loan-level data since 1990s and Gertler-Karadi monetary policy shocks. Higher policy rates shift credit supply from banks to less-regulated, more fragile nonbanks. The bank-to-nonbank shift largely neutralizes total credit and associated consumption effects for consumer loans and attenuates the response of total corporate credit (firm investment) and mortgages (house price spillovers). Moreover, different from the so-called risktaking channel, higher policy rates imply more risk-taking by nonbanks.

Keywords: Nonbank Lending; Monetary Policy Transmission; Risk-Taking Channel (search for similar items in EconPapers)
JEL-codes: E51 E52 G21 G23 G28 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-ban, nep-ifn, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Nonbanks, banks, and monetary policy: U.S. loan-level evidence since the 1990s (2022)
Working Paper: Nonbanks, Banks, and Monetary Policy: U.S. Loan-Level Evidence since the 1990s (2020)
Working Paper: Nonbanks, Banks, and Monetary Policy: U.S. Loan-Level Evidence since the 1990s (2019)
Working Paper: Nonbanks, Banks, and Monetary Policy: U.S. Loan-Level Evidence since the 1990s (2019)
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