Economic activity and the bank credit channel

Horacio Sapriza and Judit Temesvary

Journal of Banking & Finance, 2024, vol. 164, issue C

Abstract: We study empirically the effect of growth in real economic activity on the strength of the bank credit channel of monetary policy in the United States using quarterly commercial bank-level panel data between 1986 and 2018, and bank-firm matched administrative data on loan volumes and terms between 2012 and 2018. We find that monetary policy is significantly more effective through the bank credit channel in spurring activity during periods of low economic growth than in cooling the economy when growth is high. Our results also suggest that the channel operates through a broader range of loan categories and banks than previously documented, that it is stronger for business than household lending, and that for some of the major loan categories it only operates in a low economic growth environment.

Keywords: Bank lending channel; Monetary policy transmission; Bank balance sheet; GDP growth (search for similar items in EconPapers)
JEL-codes: E3 E5 G2 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:164:y:2024:i:c:s037842662400133x

DOI: 10.1016/j.jbankfin.2024.107216

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