The Impact of Monetary Policy on Bank Balance Sheets
63 Pages Posted: 1 Sep 2000 Last revised: 6 Mar 2022
Date Written: August 1994
Abstract
This paper uses disaggregated data on bank balance sheets to provide a test of the lending view of monetary policy transmission. We argue that if the lending view is correct, one should expect the loan and security portfolios of large and small banks to respond differentially to a contraction in monetary policy. We first develop this point with a theoretical model; we then test to see if the model's predictions are borne out in the data.
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