New Evidence on the Lending Channel

The response of aggregate lending to monetary policy is stronger in state banking markets where financially constrained banks have more market share. On the other hand, there is little difference in the response of state output across the market share financially constrained banks, implying that the...

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Bibliographic Details
Published in:Journal of money, credit and banking credit and banking, 2006-04, Vol.38 (3), p.751-775
Main Author: Ashcraft, Adam B.
Format: Article
Language:English
Subjects:
Analysis
Bank assets
Bank capital
Bank holding companies
Bank lending channels
Bank loans
Bank markets
Bank operations
Banking policy
Banking system
Commercial loans
Empirical tests
Federal funds rate
Forecasts and trends
Lending
Loans
Market shares
Market trend/market analysis
Marketing research
Monetary economics
Monetary policy
Output rate
Regression analysis
Studies
Transmission mechanism
U.S.A
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Summary:The response of aggregate lending to monetary policy is stronger in state banking markets where financially constrained banks have more market share. On the other hand, there is little difference in the response of state output across the market share financially constrained banks, implying that the aggregate elasticity of output to bank lending is very small, if not zero. I conclude that while small firms might view bank loans as special, they are not special enough for the lending channel to be an important part of how monetary policy works.
ISSN:0022-2879
1538-4616
1538-4616
DOI:10.1353/mcb.2006.0037