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The macroeconomic relevance of bank and nonbank credit: An exploration of U.S. data

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  • Herman, Alexander
  • Igan, Deniz
  • Solé, Juan

Abstract

This paper exploits the Financial Accounts of the United States to derive long time series of bank and nonbank credit to different sectors, and to examine the cyclical behavior of these series in relation to (i) the long-term business cycle, (ii) recessions and recoveries, and (iii) systemic financial crises. We find that bank and nonbank credit exhibit different dynamics throughout the business cycle. We also examine the role of bank and nonbank credit in the creation of financial interconnections and illustrate a method to conduct macro-financial stability assessments.

Suggested Citation

  • Herman, Alexander & Igan, Deniz & Solé, Juan, 2017. "The macroeconomic relevance of bank and nonbank credit: An exploration of U.S. data," Journal of Financial Stability, Elsevier, vol. 32(C), pages 124-141.
    • Handle: RePEc:eee:finsta:v:32:y:2017:i:c:p:124-141
    DOI: 10.1016/j.jfs.2017.06.009
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    Citations

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    Cited by:

    1. M. Ayhan Kose & Naotaka Sugawara & Marco E. Terrones, 2020. "Global Recessions," Working Papers 162, Peruvian Economic Association.
    2. C. Bora Durdu & Molin Zhong, 2023. "Understanding Bank and Nonbank Credit Cycles: A Structural Exploration," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 55(1), pages 103-142, February.
    3. Nina Boyarchenko & Leonardo Elias & Philippe Mueller, 2019. "Corporate Credit Provision," Staff Reports 895, Federal Reserve Bank of New York.
    4. Byrne, David & Kelly, Robert, 2019. "Monetary policy expectations and risk-taking among U.S. banks," Research Technical Papers 6/RT/19, Central Bank of Ireland.
    5. repec:fip:a00001:94154 is not listed on IDEAS
    6. Esti Kemp & Rene van Stralen & Alexandros Vardoulakis & Peter J. Wierts, 2018. "The Non-Bank Credit Cycle," Finance and Economics Discussion Series 2018-076, Board of Governors of the Federal Reserve System (U.S.).
    7. Larry D. Wall, 2021. "So Far, So Good: Government Insurance of Financial Sector Tail Risk," Policy Hub, Federal Reserve Bank of Atlanta, vol. 2021(13), November.

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    More about this item

    Keywords

    Macro-financial linkages; Financial intermediation; Liquidity transformation; Nonbank financial institutions;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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