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Nonbanks, Banks, and Monetary Policy: U.S. Loan-Level Evidence since the 1990s

Author

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  • David Elliott
  • Ralf R. Meisenzahl
  • José-Luis Peydró
  • Bryce C. Turner

Abstract

We show that nonbanks (funds, shadow banks, fintech) affect the transmission of monetary policy to output, prices and the distribution of risk via credit supply. For identification, we exploit exhaustive US loan-level data since the 1990s, borrowerlender relationships and Gertler-Karadi monetary policy shocks. Higher policy rates shift credit supply from banks to nonbanks, thereby largely neutralizing associated consumption effects (via consumer loans), while just attenuating firm investment and house price spillovers (via corporate loans and mortgages). Moreover, dfferent from the risk-taking channel, higher policy rates increase risk-taking, as less-regulated, fragile nonbanks |in all credit markets| expand supply to riskier borrowers.

Suggested Citation

  • David Elliott & Ralf R. Meisenzahl & José-Luis Peydró & Bryce C. Turner, 2019. "Nonbanks, Banks, and Monetary Policy: U.S. Loan-Level Evidence since the 1990s," Working Papers 1129, Barcelona School of Economics.
  • Handle: RePEc:bge:wpaper:1129
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    Cited by:

    1. Iñaki Aldasoro & Sebastian Doerr & Haonan Zhou, 2022. "Non-bank lenders in the syndicated loan market," BIS Quarterly Review, Bank for International Settlements, March.
    2. Santiago Carbó Valverde & Pedro J. Cuadros Solas & Francisco Rodríguez Fernández, 2020. "Taxonomy of the Spanish FinTech ecosystem and the drivers of FinTechs’ performance," Revista de Estabilidad Financiera, Banco de España, issue MAY.
    3. Darmouni, Olivier & Geisecke, Oliver & Rodnyanky, Alexander, 2019. "The Bond Lending Channel of Monetary Policy," MPRA Paper 95141, University Library of Munich, Germany.
    4. Huang, Yiping & Li, Xiang & Qiu, Han & Yu, Changhua, 2023. "BigTech credit and monetary policy transmission: Micro-level evidence from China," IWH Discussion Papers 18/2022, Halle Institute for Economic Research (IWH), revised 2023.
    5. Darja Milic, 2021. "The impact of non-banking financial institutions on monetary policy transmission in Euro area," Empirical Economics, Springer, vol. 61(4), pages 1779-1817, October.
    6. Huang, Yiping & Li, Xiang & Wang, Chu, 2021. "What does peer-to-peer lending evidence say about the Risk-Taking Channel of monetary policy?," Journal of Corporate Finance, Elsevier, vol. 66(C).
    7. Deimantė Teresienė & Greta Keliuotytė-Staniulėnienė & Rasa Kanapickienė, 2021. "Sustainable Economic Growth Support through Credit Transmission Channel and Financial Stability: In the Context of the COVID-19 Pandemic," Sustainability, MDPI, vol. 13(5), pages 1-34, March.
    8. Santiago Carbó Valverde & Pedro J. Cuadros Solas & Francisco Rodríguez Fernández, 2020. "Taxonomy of the Spanish FinTech ecosystem and the drivers of FinTechs’ performance," Revista de Estabilidad Financiera, Banco de España, issue Spring.

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    More about this item

    Keywords

    nonbank lending; shadow banks; monetary policy; syndicated loans; consumer loans; mortgages;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • 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
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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