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

By Matteo Ciccarelli, Angela Maddaloni, José-Luis Peydró. Social Science Research Network, 2015

368 citations recorded by the source corpus.

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)

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/2b4f13465246675eee71bd4c3fb5747efbb493d6

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Citations in the corpus

Should Monetary Policy Lean Against the Wind? An Analysis Based on a DSGE Model with Banking (2013, neutral): “First, substituting the (log-linear version of the) optimal decision for Kt and the definition of NW e t — equations (16) and (17) — into the borrowing constraint, we obtain a(n inverse) demand curve for loans, from the entrepreneurs’ first order conditions:”
In Search for Yield? Survey-Based Evidence on Bank Risk Taking (2014, methodology): “By ordering the policy instrument below the factors summarizing the banking variables, we follow most of the SVAR literature which jointly models macroeconomic and credit variables (Ciccarelli et al. 2010).”
The Effects of Bank Capital on Lending: What Do We Know, and What Does It Mean? (2012, background): “However, the standard deviation of $145 billion is consistent with the fact that the four largest institutions in the sample have assets above $1 trillion, whereas total assets for the smallest ones are below $1 billion.(11) Quarterly growth in total and C&I loans averages 3 percent across all BHCs ”
Bank lending in uncertain times (2020, background): “The first one is that EONIA might capture at least in part the impact of unconventional monetary interventions that we do not account for explicitly in the regressions (Ciccarelli et al., 2015).”
Income Distribution, Credit and Fiscal Policies in an Agent-Based Keynesian Model (2013, neutral): “…et al., 1993; Lown and Morgan, 2006; Claessens et al., 2009) as well as from cross-sectional ones (e.g. Fazzari et al., 1988; Gertler and Gilchrist, 1994; Kashyap and Stein, 2000; Leary, 2009), including studies encompassing the last recession (Black and Rosen, 2011; Ciccarelli et al., 2010).”
Macroeconomic Propagation Under Different Regulatory Regimes: Evidence From an Estimated DSGE Model For the Euro Area (2010, positive): “…to bank capital positions (or loan supply shocks more generally) in the range of an approximately 0.1- to 1.0-percentage-point impact on real economic activity; see, e.g., Van den Heuvel (2008), Ciccarelli, Maddaloni, and Peydró (2009), Francis and Osborne (2009), and Cappiello et al. (2010).”
Loan Supply Shocks and the Business Cycle (2017, neutral): “…Survey, see Lown and Morgan, 2006; Berrospide and Edge, 2010; and Bassett et al., 2012; for the Euro Area, using the ECB’s Bank Lending Survey, see Ciccarelli et al., 2010; Hempell and Kok Sørensen, 2010; and Del Giovane et al. 2011) or supervisors ratings on bank health (Peek at el., 2003).”
Loan Supply Shocks During the Financial Crisis: Evidence for the Euro Area (2012, methodology): “Ciccarelli et al. (2010) use survey data from the bank lending survey as proxy for loan supply and demand.”