Credit Supply and Monetary Policy: Identifying the Bank Balance-Sheet Channel with Loan Applications
Gabriel Jiménez, Steven Ongena, José-Luis Peydró, Jesús Saurina
American Economic Review · 2012 · Volume 102 · Issue 5
Abstract
We analyze the impact of monetary policy on the supply of bank credit. Monetary policy affects both loan supply and demand, thus making identification a steep challenge. We therefore analyze a novel, supervisory dataset with loan applications from Spain. Accounting for time-varying firm heterogeneity in loan demand, we find that tighter monetary and worse economic conditions substantially reduce loan granting, especially from banks with lower capital or liquidity ratios; responding to applications for the same loan, weak banks are less likely to grant the loan. Finally, firms cannot offset the resultant credit restriction by applying to other banks. (JEL E32, E44, E52, G21, G32)
Keywords
Business Fluctuations, Cycles, Financial Markets and the Macroeconomy, Monetary Policy, Banks, Other Depository Institutions, Micro Finance Institutions, Mortgages, Financing Policy, Financial Risk and Risk Management, Capital and Ownership Structure, Value of Firms
Enable JavaScript for citation tools and additional paper interactions.