Trusting the Bankers: A New Look at the Credit Channel of Monetary Policy

Matteo Ciccarelli, Angela Maddaloni and Jose-Luis Peydro

Review of Economic Dynamics, 2015, vol. 18, issue 4, 979-1002

Abstract: Monetary policy has real effects through credit supply and demand, and since these changes are mostly unobserved, the complete identification of the credit channel is generally unfeasible. Bank lending surveys by central banks, however, contain reliable quarterly information on changes in loan conditions due to bank, firm and household balance sheet strength and on changes in loan demand. Using the U.S. and the unique Euro area surveys, we find that the credit channel amplifies a monetary policy shock on GDP and prices through the balance-sheets of households, firms and banks. For corporate loans, amplification is highest through the bank lending and the borrower's balance sheet channel; for households, demand is the strongest channel (Copyright: Elsevier)

Keywords: Credit channel; Firm and household balance-sheet channels; Bank lending channel; Credit crunch; Credit supply; Monetary policy (search for similar items in EconPapers)
JEL-codes: E32 E44 E5 G01 G21 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (139)

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DOI: 10.1016/j.red.2014.11.002

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