Nonbanks, banks, and monetary policy: U.S. loan-level evidence since the 1990s

David Elliott, Ralf R. Meisenzahl, Jose-Luis Peydro and B.C. Turner

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: We show that nonbanks (funds, shadow banks, fintech) affect the transmission of monetary policy to output, prices and the distribution of risk via credit supply. For identification, we exploit exhaustive US loan-level data since the 1990s, borrowerlender relationships and Gertler-Karadi monetary policy shocks. Higher policy rates shift credit supply from banks to nonbanks, thereby largely neutralizing associated consumption effects (via consumer loans), while just attenuating firm investment and house price spillovers (via corporate loans and mortgages). Moreover, dfferent from the risk-taking channel, higher policy rates increase risk-taking, as less-regulated, fragile nonbanks |in all credit markets| expand supply to riskier borrowers.

Keywords: Negative rates; non-standard monetary policy; reach-for-yield; securities; banks. (search for similar items in EconPapers)
JEL-codes: E51 E52 G21 G23 G28 (search for similar items in EconPapers)
Date: 2019-03, Revised 2022-06
New Economics Papers: this item is included in nep-ban, nep-cba, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Nonbanks, Banks, and Monetary Policy: U.S. Loan-Level Evidence since the 1990s (2020)
Working Paper: Nonbanks, Banks, and Monetary Policy: U.S. Loan-Level Evidence since the 1990s (2020)
Working Paper: Nonbanks, Banks, and Monetary Policy: U.S. Loan-Level Evidence since the 1990s (2019)
Working Paper: Nonbanks, Banks, and Monetary Policy: U.S. Loan-Level Evidence since the 1990s (2019)
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