TY - JOUR
T1 - Credit supply and monetary policy
T2 - Identifying the bank balance-sheet channel with loan applications
AU - Jimenez Porras, G.
AU - Ongena, S.
AU - Peydro, J.L.
AU - Saurina, J.
PY - 2012
Y1 - 2012
N2 - 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.
AB - 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.
M3 - Article
SN - 0002-8282
VL - 102
SP - 2301
EP - 2326
JO - American Economic Review
JF - American Economic Review
IS - 5
ER -