Monetary Easing and the Lending Concentration Channel of Monetary Policy Transmission
60 Pages Posted: 12 Dec 2015 Last revised: 8 Jun 2020
Date Written: April 3, 2020
I use loan-level data on US mortgage loan applications to identify the effect of lending concentration on the pass-through of the 2008 monetary easing to lending volumes. Lenders eased credit conditions but less so in counties with higher lending concentration. Furthermore, within a county, the pass-through was lower for lenders with higher local market power. This channel is symmetrically active during the 2005 monetary tightening episode. It is distinct from the deposits channel of monetary policy transmission, and its influence is ubiquitous: it affects both new loans and refinances, depository and non-depository lenders, and market leaders and laggards.
Keywords: mortgage credit, lending channel, monetary policy, market concentration, market power
JEL Classification: G01, G21, G23, E51, E52, E58
Suggested Citation: Suggested Citation