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Test of the bank lending channel: the case of US consumer loans

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  • Yu Hsing

Abstract

Based on a simultaneous-equation model incorporating potential substitution of credit card loans for conventional consumer loans, this article finds that the demand for conventional consumer loans is negatively affected by the personal loan rate and positively associated with the credit card rate and real per capita disposable income and that the supply of conventional consumer loans is positively affected by the personal loan rate and bank deposits and negatively impacted by the federal funds rate and the real effective exchange rate. Hence, the bank lending channel for conventional consumer loans is confirmed as monetary easing to reduce the federal funds rate or increased deposits/reserves is expected to increase loan supply.

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  • Yu Hsing, 2014. "Test of the bank lending channel: the case of US consumer loans," Applied Economics Letters, Taylor & Francis Journals, vol. 21(7), pages 466-469, May.
    • Handle: RePEc:taf:apeclt:v:21:y:2014:i:7:p:466-469
    DOI: 10.1080/13504851.2013.868578
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    Cited by:

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    2. Mujtaba Zia & Jennifer Logan, 2021. "Bank Revolving Credit as a Channel of Monetary Policy," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 13(2), pages 147-160, December.
    3. Matousek, Roman & Solomon, Helen, 2018. "Bank lending channel and monetary policy in Nigeria," Research in International Business and Finance, Elsevier, vol. 45(C), pages 467-474.

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