IDEAS home Printed from https://ideas.repec.org/p/bis/biswps/1211.html
   My bibliography  Save this paper

Non-bank lending and the transmission of monetary policy

Author

Listed:
  • Dominic Cucic
  • Denis Gorea

Abstract

We analyze the role of nonbank lenders in the transmission of monetary policy using data on the universe of unsecured credit to firms and households in Denmark. Nonbanks increase their credit supply after a monetary contraction, both relative to banks and in absolute terms. The nonbank credit expansion is driven by long-term debt funding flowing to nonbanks. The attenuation of the traditional bank lending channel of monetary policy has real effects: nonbank credit insulates corporate investment and household consumption from adverse consequences of monetary contractions.

Suggested Citation

  • Dominic Cucic & Denis Gorea, 2024. "Non-bank lending and the transmission of monetary policy," BIS Working Papers 1211, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:1211
    as

    Download full text from publisher

    File URL: https://www.bis.org/publ/work1211.pdf
    File Function: Full PDF document
    Download Restriction: no
    File URL: https://www.bis.org/publ/work1211.htm
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Itamar Drechsler & Alexi Savov & Philipp Schnabl, 2017. "The Deposits Channel of Monetary Policy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(4), pages 1819-1876.
    2. Andreas Fuster & Matthew Plosser & Philipp Schnabl & James Vickery, 2019. "The Role of Technology in Mortgage Lending," The Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 1854-1899.
    3. Asger Lau Andersen & Niels Johannesen & Mia Jørgensen & José-Luis Peydró, 2020. "Monetary Policy and Inequality," Working Papers 1227, Barcelona School of Economics.
    4. Ben S. Bernanke & Mark Gertler, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 27-48, Fall.
    5. Emi Nakamura & Jón Steinsson, 2018. "High-Frequency Identification of Monetary Non-Neutrality: The Information Effect," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(3), pages 1283-1330.
    6. Asim Ijaz Khwaja & Atif Mian, 2008. "Tracing the Impact of Bank Liquidity Shocks: Evidence from an Emerging Market," American Economic Review, American Economic Association, vol. 98(4), pages 1413-1442, September.
    7. Mark Gertler & Peter Karadi, 2015. "Monetary Policy Surprises, Credit Costs, and Economic Activity," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(1), pages 44-76, January.
    8. Marek Jarociński & Peter Karadi, 2020. "Deconstructing Monetary Policy Surprises—The Role of Information Shocks," American Economic Journal: Macroeconomics, American Economic Association, vol. 12(2), pages 1-43, April.
    9. Vasso Ioannidou & Steven Ongena & José-Luis Peydró, 2015. "Monetary Policy, Risk-Taking, and Pricing: Evidence from a Quasi-Natural Experiment," Review of Finance, European Finance Association, vol. 19(1), pages 95-144.
    10. James Cloyne & Clodomiro Ferreira & Paolo Surico, 2020. "Monetary Policy when Households have Debt: New Evidence on the Transmission Mechanism," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 87(1), pages 102-129.
    11. Degryse, Hans & De Jonghe, Olivier & Jakovljević, Sanja & Mulier, Klaas & Schepens, Glenn, 2019. "Identifying credit supply shocks with bank-firm data: Methods and applications," Journal of Financial Intermediation, Elsevier, vol. 40(C).
    12. Olivier Coibion, 2012. "Are the Effects of Monetary Policy Shocks Big or Small?," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(2), pages 1-32, April.
    13. Søren Leth-Petersen, 2010. "Intertemporal Consumption and Credit Constraints: Does Total Expenditure Respond to an Exogenous Shock to Credit?," American Economic Review, American Economic Association, vol. 100(3), pages 1080-1103, June.
    14. Christina D. Romer & David H. Romer, 2004. "A New Measure of Monetary Shocks: Derivation and Implications," American Economic Review, American Economic Association, vol. 94(4), pages 1055-1084, September.
    15. Buchak, Greg & Matvos, Gregor & Piskorski, Tomasz & Seru, Amit, 2018. "Fintech, regulatory arbitrage, and the rise of shadow banks," Journal of Financial Economics, Elsevier, vol. 130(3), pages 453-483.
    16. Manasa Gopal & Philipp Schnabl, 2022. "The Rise of Finance Companies and FinTech Lenders in Small Business Lending," The Review of Financial Studies, Society for Financial Studies, vol. 35(11), pages 4859-4901.
    17. Benjamin Nelson & Gabor Pinter & Konstantinos Theodoridis, 2018. "Do contractionary monetary policy shocks expand shadow banking?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 33(2), pages 198-211, March.
    18. Holm-Hadulla, Fédéric & Thürwächter, Claire, 2021. "Heterogeneity in corporate debt structures and the transmission of monetary policy," European Economic Review, Elsevier, vol. 136(C).
    19. Kaiji Chen & Jue Ren & Tao Zha, 2018. "The Nexus of Monetary Policy and Shadow Banking in China," American Economic Review, American Economic Association, vol. 108(12), pages 3891-3936, December.
    20. Drechsler, Itamar & Savov, Alexi & Schnabl, Philipp, 2022. "How monetary policy shaped the housing boom," Journal of Financial Economics, Elsevier, vol. 144(3), pages 992-1021.
    21. Thais Lærkholm Jensen & Niels Johannesen, 2017. "The Consumption Effects of the 2007–2008 Financial Crisis: Evidence from Households in Denmark," American Economic Review, American Economic Association, vol. 107(11), pages 3386-3414, November.
    22. Marek Jarocinski & Peter Karadi, 2017. "Central Bank Information Shocks," 2017 Meeting Papers 1193, Society for Economic Dynamics.
    23. Edmund Crawley & Andreas Kuchler, 2023. "Consumption Heterogeneity: Micro Drivers and Macro Implications," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(1), pages 314-341, January.
    24. Henrik Yde Andersen & Søren Leth-Petersen, 2021. "Housing Wealth or Collateral: How Home Value Shocks Drive Home Equity Extraction and Spending," Journal of the European Economic Association, European Economic Association, vol. 19(1), pages 403-440.
    25. Marco Di Maggio & Amir Kermani & Benjamin J. Keys & Tomasz Piskorski & Rodney Ramcharan & Amit Seru & Vincent Yao, 2017. "Interest Rate Pass-Through: Mortgage Rates, Household Consumption, and Voluntary Deleveraging," American Economic Review, American Economic Association, vol. 107(11), pages 3550-3588, November.
    26. Kairong Xiao & Francesca Cornelli, 2020. "Monetary Transmission through Shadow Banks," The Review of Financial Studies, Society for Financial Studies, vol. 33(6), pages 2379-2420.
    27. Yifei Wang & Toni M. Whited & Yufeng Wu & Kairong Xiao, 2022. "Bank Market Power and Monetary Policy Transmission: Evidence from a Structural Estimation," Journal of Finance, American Finance Association, vol. 77(4), pages 2093-2141, August.
    28. Gabriel Chodorow-Reich, 2014. "The Employment Effects of Credit Market Disruptions: Firm-level Evidence from the 2008-9 Financial Crisis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(1), pages 1-59.
    29. Sergey Chernenko & Isil Erel & Robert Prilmeier, 2022. "Why Do Firms Borrow Directly from Nonbanks?," The Review of Financial Studies, Society for Financial Studies, vol. 35(11), pages 4902-4947.
    30. Martin Browning & S¯ren Leth-Petersen, 2003. "Imputing consumption from income and wealth information," Economic Journal, Royal Economic Society, vol. 113(488), pages 282-301, June.
    31. Isha Agarwal & Malin Hu & Raluca Roman & Keling Zheng, 2023. "Lending by Servicing: Monetary Policy Transmission Through Shadow Banks," Working Papers 23-14, Federal Reserve Bank of Philadelphia.
    32. Justin Murfin & Ryan Pratt, 2019. "Who Finances Durable Goods and Why It Matters: Captive Finance and the Coase Conjecture," Journal of Finance, American Finance Association, vol. 74(2), pages 755-793, April.
    33. Martin Blomhoff Holm & Pascal Paul & Andreas Tischbirek, 2021. "The Transmission of Monetary Policy under the Microscope," Journal of Political Economy, University of Chicago Press, vol. 129(10), pages 2861-2904.
    Full references (including those not matched with items on IDEAS)

    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. Elliott, David & Meisenzahl, Ralf R. & Peydró, José-Luis, 2024. "Nonbank lenders as global shock absorbers: Evidence from US monetary policy spillovers," Journal of International Economics, Elsevier, vol. 149(C).
    2. Iñaki Aldasoro & Sebastian Doerr & Haonan Zhou, 2023. "Non-bank lending during crises," BIS Working Papers 1074, Bank for International Settlements.
    3. Peydró, José-Luis & Jasova, Martina & Mendicino, Caterina & Panetti, Ettore & Supera, Dominik, 2021. "Monetary Policy, Labor Income Redistribution and the Credit Channel: Evidence from Matched Employer-Employee and Credit Registe," CEPR Discussion Papers 16549, C.E.P.R. Discussion Papers.
    4. Asger Lau Andersen & Niels Johannesen & Mia Jørgensen & José-Luis Peydró, 2020. "Monetary policy and inequality," Economics Working Papers 1761, Department of Economics and Business, Universitat Pompeu Fabra, revised Mar 2021.
    5. Hasan, Iftekhar & Kwak, Boreum & Li, Xiang, 2023. "Financial technologies and the effectiveness of monetary policy transmission," IWH Discussion Papers 26/2020, Halle Institute for Economic Research (IWH), revised 2023.
    6. Isha Agarwal & Malin Hu & Raluca Roman & Keling Zheng, 2023. "Lending by Servicing: Monetary Policy Transmission Through Shadow Banks," Working Papers 23-14, Federal Reserve Bank of Philadelphia.
    7. Rodrigo Barbone Gonzalez, 2019. "Monetary policy surprises and employment: evidence from matched bank-firm loan data on the bank lending-channel," BIS Working Papers 799, Bank for International Settlements.
    8. Cafiso, Gianluca & Rivolta, Giulia, 2024. "Conventional monetary interventions through the credit channel and the rise of non-bank institutions," Economic Systems, Elsevier, vol. 48(1).
    9. Tomás Opazo, 2023. "The Heterogeneous Effect of Monetary Policy Shocks: Evidence for US Households," Working Papers Central Bank of Chile 992, Central Bank of Chile.
    10. Samuel Ligonnière & Salima Ouerk, 2024. "The unequal distribution of credit: Is there any role for monetary policy?," French Stata Users' Group Meetings 2024 08, Stata Users Group.
    11. Greg Buchak & Gregor Matvos & Tomasz Piskorski & Amit Seru, 2024. "Aggregate Lending and Modern Financial Intermediation: Why Bank Balance Sheet Models Are Miscalibrated," NBER Macroeconomics Annual, University of Chicago Press, vol. 38(1), pages 239-287.
    12. Garriga, Carlos & Kydland, Finn E. & Šustek, Roman, 2021. "MoNK: Mortgages in a New-Keynesian model," Journal of Economic Dynamics and Control, Elsevier, vol. 123(C).
    13. Kilman, Josefin, 2020. "Monetary Policy and Income Inequality in the United States: The Role of Labor Unions," Working Papers 2020:10, Lund University, Department of Economics, revised 20 Sep 2022.
    14. Ferreira, Leonardo N., 2022. "Forward guidance matters: Disentangling monetary policy shocks," Journal of Macroeconomics, Elsevier, vol. 73(C).
    15. Cesa-Bianchi, Ambrogio & Thwaites, Gregory & Vicondoa, Alejandro, 2020. "Monetary policy transmission in the United Kingdom: A high frequency identification approach," European Economic Review, Elsevier, vol. 123(C).
    16. Taylor, Alan M. & Cloyne, James & Hürtgen, Patrick, 2022. "Global Monetary and Financial Spillovers: Evidence from a New Measure of Bundesbank Policy Shocks," CEPR Discussion Papers 17587, C.E.P.R. Discussion Papers.
    17. Hasan, Iftekhar & Li, Xiang & Takalo, Tuomas, 2023. "Technological innovation and the bank lending channel of monetary policy transmission," IWH Discussion Papers 14/2021, Halle Institute for Economic Research (IWH), revised 2023.
    18. Christian Bittner & Diana Bonfim & Florian Heider & Farzad Saidi & Glenn Schepens & Carla Soares, 2022. "The Augmented Bank Balance-Sheet Channel of Monetary Policy," ECONtribute Discussion Papers Series 149, University of Bonn and University of Cologne, Germany.
    19. 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).
    20. Firmin Doko Tchatoka & Qazi Haque, 2024. "Revisiting the Macroeconomic Effects of Monetary Policy Shocks," The Economic Record, The Economic Society of Australia, vol. 100(329), pages 234-259, June.

    More about this item

    Keywords

    monetary policy; nonbanks; shadow banks; banks; real effects;
    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
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

    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:1211. 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.