Economics at your fingertips  

On the firm-level implications of the Bank Lending Channel of monetary policy

Roger Aliaga-Diaz () and Maria Olivero ()

Journal of Economic Dynamics and Control, 2010, vol. 34, issue 10, 2038-2055

Abstract: Standard models of the Bank Lending Channel are unable to yield predictions on the differential impact of monetary policy shocks over heterogeneous borrowers. This inability has made researchers doubt about the role played by bank credit as a transmission mechanism of monetary policy. Moreover, it has made them reject those models in favor of the Balance Sheet Channel as a transmission mechanism. In this paper we show that an "augmented" version of the Bank Lending Channel that allows for firm heterogeneity (but without any role for firms' balance sheets) reproduces well the dynamics of firm-level data. Our contribution is to show that it is not clear that the Bank Lending Channel should be rejected in favor of alternative theories on the basis of its inability to reproduce firm-level data. Thus, there is additional room for econometric tests that can provide support to the Bank Lending Channel.

Keywords: Credit; channel; Bank; Lending; Channel; "Flight; to; Quality"; Transmission; channels; of; monetary; policy (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

Journal of Economic Dynamics and Control is currently edited by J. Bullard, C. Chiarella, H. Dawid, C. H. Hommes, P. Klein and C. Otrok

More articles in Journal of Economic Dynamics and Control from Elsevier
Bibliographic data for series maintained by Nithya Sathishkumar ().

Page updated 2021-04-09
Handle: RePEc:eee:dyncon:v:34:y:2010:i:10:p:2038-2055