How the credit channel works
Subtitle: differentiating the bank lending channel and the balance sheet channel
By: Lamont K. Black, Richard J. Rosen.
Contributors: Rosen, Richard Joseph.; Federal Reserve Bank of Chicago. Research Dept.
Series: Working paper series -- WP-2007-13; Working paper series (Federal Reserve Bank of Chicago. Research Dept. : Online) -- WP-2007-13.
Publisher: Federal Reserve Bank of Chicago
Published: 2007
Place of publication: [Chicago, Ill.]
Language: eng
Format: Electronic resource
Subjects: Bank loans.; Monetary policy.; Credit.
Description: "The credit channel of monetary policy transmission operates through changes in lending.  To examine this channel, we explore how movements in the real federal funds rate affect bank lending.  Using data on individual loans from the Survey of Terms of Bank Lending, we are able to differentiate two ways the credit channel can work: by affecting overall bank lending (the bank lending channel) and by affecting the allocation of loans (the balance sheet channel).  We find evidence consistent with the operation of both internal credit channels.  During periods of tight monetary policy, banks adjust their stock of loans by reducing the maturity of loan originations and they reallocate their short-term loan supply from small firms to large firms.  These results are stronger for large banks than for small banks"--Federal Reserve Bank of Chicago web site.
Notes: Title from PDF file as viewed on 1/10/2008.

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