Corporate Finance and Monetary Policy
Randall Wright and
Cathy Zhang ()
American Economic Review, 2018, vol. 108, issue 4-5, 1147-86
We develop a general equilibrium model where entrepreneurs finance random investment opportunities using trade credit, bank-issued assets, or currency. They search for bank funding in over-the-counter markets where loan sizes, interest rates, and down payments are negotiated bilaterally. The theory generates pass-through from nominal interest rates to real lending rates depending on market microstructure, policy, and firm characteristics. Higher banks' bargaining power, for example, raises pass-through but weakens transmission to investment. Interest rate spreads arise from liquidity, regulatory, and intermediation premia and depend on policy described as money growth or open market operations.
JEL-codes: E43 E52 G21 G31 G32 L26 (search for similar items in EconPapers)
Note: DOI: 10.1257/aer.20161048
References: Add references at CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed
Downloads: (external link)
https://www.aeaweb.org/articles/attachments?retrie ... b_o5K-W_BnTXl6j7puq6 (application/zip)
https://www.aeaweb.org/articles/attachments?retrie ... e_uuxcNsF-EI_2SPP5Dn (application/zip)
https://www.aeaweb.org/articles/attachments?retrie ... xZquKuDScXsiPUsHaqVO (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.
Working Paper: Corporate Finance and Monetary Policy (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:108:y:2018:i:4-5:p:1147-86
Ordering information: This journal article can be ordered from
Access Statistics for this article
American Economic Review is currently edited by Esther Duflo
More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().