Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/70522 
Year of Publication: 
2007
Series/Report no.: 
Working Paper No. 2007-13
Publisher: 
Federal Reserve Bank of Chicago, Chicago, IL
Abstract: 
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.
Document Type: 
Working Paper

Files in This Item:
File
Size
222.06 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.