IDEAS home Printed from https://ideas.repec.org/p/bis/biswps/1088.html
   My bibliography  Save this paper

Big techs and the credit channel of monetary policy

Author

Listed:
  • Fiorella De Fiore
  • Leonardo Gambacorta
  • Cristina Manea

Abstract

We document some stylized facts on big tech credit and rationalize them through the lens of a model where big techs facilitate matching on the e-commerce platform and extend loans. The big tech reinforces credit repayment with the threat of exclusion from the platform, while bank credit is secured against collateral. Our model suggests that: (i) a rise in big techs' matching efficiency increases the value for firms of trading on the platform and the availability of big tech credit; (ii) big tech credit mitigates the initial response of output to a monetary shock, while increasing its persistence; (iii) the efficiency gains generated by big techs are limited by the distortionary fees collected from users.

Suggested Citation

  • Fiorella De Fiore & Leonardo Gambacorta & Cristina Manea, 2023. "Big techs and the credit channel of monetary policy," BIS Working Papers 1088, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:1088
    as

    Download full text from publisher

    File URL: https://www.bis.org/publ/work1088.pdf
    File Function: Full PDF document
    Download Restriction: no
    File URL: https://www.bis.org/publ/work1088.htm
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Mark Gertler & Simon Gilchrist, 1994. "Monetary Policy, Business Cycles, and the Behavior of Small Manufacturing Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(2), pages 309-340.
    2. Gambacorta, Leonardo & Huang, Yiping & Qiu, Han & Wang, Jingyi, 2024. "How do machine learning and non-traditional data affect credit scoring? New evidence from a Chinese fintech firm," Journal of Financial Stability, Elsevier, vol. 73(C).
    3. Atif Mian & Amir Sufi, 2011. "House Prices, Home Equity-Based Borrowing, and the US Household Leverage Crisis," American Economic Review, American Economic Association, vol. 101(5), pages 2132-2156, August.
    4. Chen Lian & Yueran Ma, 2021. "Anatomy of Corporate Borrowing Constraints," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 136(1), pages 229-291.
    5. Christian Haddad & Lars Hornuf, 2019. "The emergence of the global fintech market: economic and technological determinants," Small Business Economics, Springer, vol. 53(1), pages 81-105, June.
    6. Nikolov, Kalin, 2011. "A model of borrower reputation as intangible collateral," MPRA Paper 32939, University Library of Munich, Germany.
    7. Majid Bazarbash, 2019. "FinTech in Financial Inclusion: Machine Learning Applications in Assessing Credit Risk," IMF Working Papers 2019/109, International Monetary Fund.
    8. Gertler, Mark & Karadi, Peter, 2011. "A model of unconventional monetary policy," Journal of Monetary Economics, Elsevier, vol. 58(1), pages 17-34, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hasan, Iftekhar & Li, Xiang & Takalo, Tuomas, 2023. "Technological innovation and the bank lending channel of monetary policy transmission," BOFIT Discussion Papers 9/2023, Bank of Finland Institute for Emerging Economies (BOFIT).
    2. igescu, iulia, 2023. "With or Without Usura? Monetary Policy and Market Creation," MPRA Paper 120865, University Library of Munich, Germany.
    3. Cornelli, Giulio & De Fiore, Fiorella & Gambacorta, Leonardo & Manea, Cristina, 2024. "Fintech vs bank credit: How do they react to monetary policy?," Economics Letters, Elsevier, vol. 234(C).
    4. Hasan, Iftekhar & Kwak, Boreum & Li, Xiang, 2024. "Financial technologies and the effectiveness of monetary policy transmission," European Economic Review, Elsevier, vol. 161(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Leonardo Gambacorta & Yiping Huang & Zhenhua Li & Han Qiu & Shu Chen, 2020. "Data vs collateral," BIS Working Papers 881, Bank for International Settlements.
    2. Arun Gupta & Horacio Sapriza & Vladimir Yankov, 2023. "The Collateral Channel and Bank Credit," Richmond Fed Economic Brief, Federal Reserve Bank of Richmond, vol. 23(33), October.
    3. Leonardo Gambacorta & Yiping Huang & Zhenhua Li & Han Qiu & Shu Chen, 2023. "Data versus Collateral," Review of Finance, European Finance Association, vol. 27(2), pages 369-398.
    4. Marco Di Maggio & Amir Kermani & Christopher Palmer, 2016. "How Quantitative Easing Works: Evidence on the Refinancing Channel," NBER Working Papers 22638, National Bureau of Economic Research, Inc.
    5. Ono, Arito & Uchida, Hirofumi & Udell, Gregory F. & Uesugi, Iichiro, 2021. "Lending pro-cyclicality and macroprudential policy: Evidence from Japanese LTV ratios," Journal of Financial Stability, Elsevier, vol. 53(C).
    6. Galeone, Graziana & Ranaldo, Simona & Fusco, Antonio, 2024. "ESG and FinTech: Are they connected?," Research in International Business and Finance, Elsevier, vol. 69(C).
    7. Lawrence Christiano & Husnu Dalgic & Xiaoming Li, 2022. "Modelling the Great Recession as a Bank Panic: Challenges," Economica, London School of Economics and Political Science, vol. 89(S1), pages 200-238, June.
    8. Bahaj, Saleem Abubakr & Foulis, Angus & Pinter, Gabor & Surico, Paolo, 2018. "Employment and the collateral channel of monetary policy," LSE Research Online Documents on Economics 100934, London School of Economics and Political Science, LSE Library.
    9. William F. Lincoln & Andrew H. McCallum & Michael Siemer, 2017. "The Great Recession and a Missing Generation of Exporters," Finance and Economics Discussion Series 2017-108, Board of Governors of the Federal Reserve System (U.S.).
    10. Ferrando, Annalisa & Popov, Alexander & Udell, Gregory F., 2022. "Unconventional monetary policy, funding expectations, and firm decisions," European Economic Review, Elsevier, vol. 149(C).
    11. Bahaj, Saleem & Foulis, Angus & Pinter, Gabor & Surico, Paolo, 2022. "Employment and the residential collateral channel of monetary policy," Journal of Monetary Economics, Elsevier, vol. 131(C), pages 26-44.
    12. Zhang, Yahong, 2019. "Household debt, financial intermediation, and monetary policy," Journal of Macroeconomics, Elsevier, vol. 59(C), pages 230-257.
    13. Bruno Albuquerque, 2024. "Corporate debt booms, financial constraints, and the investment nexus," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 39(5), pages 766-789, August.
    14. Stijn Claessens & M Ayhan Kose, 2018. "Frontiers of macrofinancial linkages," BIS Papers, Bank for International Settlements, number 95.
    15. Jiménez, Gabriel & Ongena, Steven & Peydró, José-Luis & Saurina, Jesús, 2010. "Credit supply - Identifying balance-sheet channels with loan applications and granted loans," Working Paper Series 1179, European Central Bank.
    16. Kowalewski, Oskar & Pisany, Paweł, 2022. "Banks' consumer lending reaction to fintech and bigtech credit emergence in the context of soft versus hard credit information processing," International Review of Financial Analysis, Elsevier, vol. 81(C).
    17. Veronica Guerrieri & Guido Lorenzoni, 2017. "Credit Crises, Precautionary Savings, and the Liquidity Trap," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(3), pages 1427-1467.
    18. Adelino, Manuel & Schoar, Antoinette & Severino, Felipe, 2015. "House prices, collateral, and self-employment," Journal of Financial Economics, Elsevier, vol. 117(2), pages 288-306.
    19. Miguel H. Ferreira & Timo Haber & Christian Rörig, 2023. "Financial Constraints and Firm Size: Micro-Evidence and Aggregate Implications," Working Papers 948, Queen Mary University of London, School of Economics and Finance.
    20. Gabriel, Ricardo Duque, 2024. "The Credit Channel of Public Procurement," Journal of Monetary Economics, Elsevier, vol. 147(S).

    More about this item

    Keywords

    Big Techs; monetary policy; credit frictions;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • 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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bis:biswps:1088. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Martin Fessler (email available below). General contact details of provider: https://edirc.repec.org/data/bisssch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.