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Title: 

The bank lending channel of monetary policy has real effects

Authors: Delatte, Anne-Laure
Garg, Pranav
Imbs, Jean
Keywords: Bank lending channel;Collateral constraints;Credit supply;Real effects of monetary policy
Issue Date: 10-Sep-2024
Citation: Delatte, A.-L., Garg, P., & Imbs, J. (2024). The bank lending channel of monetary policy has real effects. NYUAD Division of Social Science Working Paper, #0103.
Series/Report no.: NYUAD Division of Social Science Working Papers;#0103
Abstract: Using a unique identification methodology, we provide evidence that easing collateral requirements has economy-wide causal effects on firms’ real outcomes, through increased credit. These effects extend beyond firms with newly eligible collateral because the credit expansion benefits all firms. We categorize banks based on their pre-reform loan portfolios, allowing us to compare banks with varying exposures to the change in collateral constraints but otherwise similar loan portfolios. We introduce a bank-level metric for firms’ real outcomes, calculated as a loan-weighted average across borrowers, which enables us to use the same identification for both credit and real effects. The effects on credit and on firms’ investment, productivity, and dividends are large.
URI: http://hdl.handle.net/2451/74657
Appears in Collections:Social Science Working Papers

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