Monetary policy and credit flows

Persistent URL
Author(s)
Bianco, Timothy
Date Issued
December 2021
Abstract
The paper assesses the impact of monetary policy shocks on credit reallocation and evaluates the importance of theoretical monetary policy transmission mechanisms. Compustat data covering 1974 through 2017 is used to compute quarterly measures of credit flows of borrowing firms. I find that expansionary monetary policy is associated with positive long-term credit creation and credit destruction (i.e. credit reallocation). This impact is larger for financially constrained firms and those that are perceived as relatively risky to the lender. This is predicted by the balance sheet channel of monetary policy and mechanisms that reduce lenders' risk perceptions and increase the tendency to search for yield.
Journal
Journal of Macroeconomics
Department
Business and Economics
Citation
Bianco, Timothy. "Monetary Policy and Credit Flows." Journal of Macroeconomics 70, (2021): 103362. doi:10.1016/j.jmacro.2021.103362. http://dx.doi.org/10.1016/j.jmacro.2021.103362
Publisher
Elsevier
Version of Article
Published article
DOI
10.1016/j.jmacro.2021.103362
ISSN
0164-0704
1873-152X
Rights
© 2021 Elsevier Inc. All rights reserved.
Subjects

Credit reallocation

Credit constraints

Monetary policy trans...

File(s)
Thumbnail Image
Name

2021_12_01_Bianco_Monetary.pdf

Description
For administrative access only. Please visit the publisher's website or contact the author(s) to obtain a copy of the article. Members of the Allegheny College community should search for the article in AggreGator to obtain access.
Size

2.6 MB

Format

Adobe PDF

Checksum (MD5)

db0344e57e4ee5214f1d8816a324bda3

Thumbnail Image
Name

2021_12_01_Bianco_MonetaryPOSTPRINT.pdf

Description
Postprint
Size

1.58 MB

Format

Adobe PDF

Checksum (MD5)

f766979aff89799904e69e3a08762e9f