Heterogeneous Bank Lending Responses to Monetary Policy: New Evidence from a Real-time Identification

By John C Bluedorn, Christopher Bowdler, Christoffer Koch

May 22, 2013

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Format: Chicago

John C Bluedorn, Christopher Bowdler, and Christoffer Koch. Heterogeneous Bank Lending Responses to Monetary Policy: New Evidence from a Real-time Identification, (USA: International Monetary Fund, 2013) accessed December 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

We present new evidence on how heterogeneity in banks interacts with monetary policy changes to impact bank lending. Using an exogenous policy measure identified from narratives on FOMC intentions and real-time economic forecasts, we find much greater heterogeneity in U.S. bank lending responses than that found in previous research based on realized federal funds rate changes. Our findings suggest that studies using realized monetary policy changes confound the monetary policy’s effects with those of changes in expected macrofundamentals. We also extend Romer and Romer (2004)’s identification scheme, and expand the time and balance sheet coverage of the U.S. banking sample.

Subject: Bank credit, Banking, Financial institutions, Financial statements, Inflation, Loans, Monetary aggregates, Money, Prices, Public financial management (PFM)

Keywords: Bank characteristic, Bank credit, Bank holding company, Banking, Equity capital, Exogenous monetary policy contraction, Financial statements, Growth regression, Inflation, Lending behavior, Lending channel, Lending growth, Lending reduction, Lending response, Loans, Market driver, Monetary aggregates, Monetary Policy Identification, Monetary policy policy change, Monetary Transmission, Responses to monetary policy, WP

Publication Details

Pages:

39
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2013/118
Stock No:

WPIEA2013118
ISBN:

9781484356760
ISSN:

1018-5941

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