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Nonbanks, Banks, and Monetary Policy: U.S. Loan-Level Evidence since the 1990s

David Elliott (), Ralf Meisenzahl, Jose-Luis Peydro () and Bryce C. Turner

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: We show that credit supply effects and associated real effects of monetary policy depend on the size of nonbank presence in the respective lending market. Nonbank presence also alters how monetary policy affects the distribution of risk. For identification, we use exhaustive loan-level data since the 1990s and Gertler-Karadi (2015) monetary policy shocks. First, different from the literature showing that low monetary policy rates increase credit supply and risk-taking by banks, we find that higher monetary policy rates shifts credit supply for corporates, mortgages, and consumers shifts from regulated banks to less regulated, more fragile nonbanks. Moreover, this shift is more pronounced for ex-ante riskier borrowers. Second, nonbanks reduce the effectiveness of the bank lending channel of monetary policy at the loan-level. However, this reduction varies substantially across lending markets. Total credit and real effects are largely neutralized in consumer loans and the associated consumption, but not in corporate loans and investment.

Keywords: nonbank lending; shadow banks; monetary policy; syndicated loans; consumer loans; mortgages (search for similar items in EconPapers)
JEL-codes: E51 E52 G21 G23 G28 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-ban, nep-mac and nep-mon
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Related works:
Working Paper: Nonbanks, Banks, and Monetary Policy: U.S. Loan-Level Evidence since the 1990s (2019) Downloads
Working Paper: Nonbanks, banks, and monetary policy: U.S. loan-level evidence since the 1990s (2019) Downloads
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