Heterogeneous Bank Lending Responses to Monetary Policy: New Evidence from a Real-time Identification

John Bluedorn, Christopher Bowdler and Christoffer Koch

No 2013/118, IMF Working Papers from International Monetary Fund

Abstract: We present new evidence on how heterogeneity in banks interacts with monetary policy changes to impact bank lending. Using an exogenous policy measure identified from narratives on FOMC intentions and real-time economic forecasts, we find much greater heterogeneity in U.S. bank lending responses than that found in previous research based on realized federal funds rate changes. Our findings suggest that studies using realized monetary policy changes confound the monetary policy’s effects with those of changes in expected macrofundamentals. We also extend Romer and Romer (2004)’s identification scheme, and expand the time and balance sheet coverage of the U.S. banking sample.

Keywords: WP; lending response; bank holding company; lending channel; lending growth; responses to monetary policy; Monetary Transmission; Monetary Policy Identification; Banking; growth regression; monetary policy policy change; market driver; exogenous monetary policy contraction; lending reduction; bank characteristic; equity capital; lending behavior; Bank credit; Loans; Financial statements; Monetary aggregates; Inflation (search for similar items in EconPapers)
Pages: 39
Date: 2013-05-22
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Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Heterogeneous Bank Lending Responses to Monetary Policy: New Evidence from a Real-Time Identification (2017)
Working Paper: Heterogeneous bank lending responses to monetary policy: new evidence from a real-time identification (2014)
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