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Trusting the bankers: A new look at the credit channel of monetary policy

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  • Ciccarelli, Matteo
  • Maddaloni, Angela
  • Peydró, José-Luis

Abstract

Credit supply and demand changes are mostly unobserved, thus identifying completely the transmission of monetary policy through the credit channel is 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.

Suggested Citation

  • Ciccarelli, Matteo & Maddaloni, Angela & Peydró, José-Luis, 2015. "Trusting the bankers: A new look at the credit channel of monetary policy," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 18(4), pages 979-1002.
    • Handle: RePEc:zbw:espost:216790
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    More about this item

    Keywords

    credit channel; firm and household balance-sheet channels; bank lending channel; credit crunch; credit supply; monetary policy;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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