Trusting the Bankers: A New Look at the Credit Channel of Monetary Policy

39 Pages Posted: 27 Feb 2011 Last revised: 30 Aug 2013

See all articles by Angela Maddaloni

Angela Maddaloni

European Central Bank (ECB)

Matteo Ciccarelli

European Central Bank (ECB)

José-Luis Peydró

Imperial College London; Centre for Economic Policy Research (CEPR); Universitat Pompeu Fabra - Faculty of Economic and Business Sciences

Multiple version iconThere are 2 versions of this paper

Date Written: July 2013

Abstract

Credit supply and demand changes are mostly unobserved, thus identifying completely the transmission of monetary policy through the credit channel is unfeasible. Bank lending surveys by central banks, however, contain reliable quarterly information on changes in loan conditions due to bank, firm and household balance sheet strength and on changes in loan demand. Using the U.S. and the unique Euro area surveys, we find that the credit channel amplifies a monetary policy shock on GDP and prices, through the balance-sheets of households, firms and banks. For corporate loans, amplification is highest through the bank lending and the borrower's balance sheet channel; for households, demand is the strongest channel.

Keywords: Credit channel, Firm and household balance-sheet channels, Bank lending channel, Credit crunch, Credit supply, Monetary policy.

JEL Classification: E32, E44, E5, G01, G21

Suggested Citation

Maddaloni, Angela and Ciccarelli, Matteo and Peydro, Jose-Luis, Trusting the Bankers: A New Look at the Credit Channel of Monetary Policy (July 2013). Available at SSRN: https://ssrn.com/abstract=1767969 or http://dx.doi.org/10.2139/ssrn.1767969

Angela Maddaloni (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Matteo Ciccarelli

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Jose-Luis Peydro

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, Barcelona 08005
Spain
(+34) 93 542 1756 (Phone)
(+34) 93 542 1746 (Fax)

HOME PAGE: http://https://sites.google.com/site/joseluispeydroswebpage/

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
323
Abstract Views
2,053
rank
47,111
PlumX Metrics