Online - Financial Crises and the Transmission of Monetary Policy to Consumer Credit Markets

Sasha Indarte (The Wharton School - University of Pennsylvania)

November 2, 2021

BDF Paris

Séminaire Banque de France


How does creditor health impact the pass-through of monetary policy to households? Using data on the universe of US credit unions, I document that creditor asset; losses increase the sensitivity of consumer credit to monetary policy. Identification exploits plausibly exogenous variation in asset losses and high-frequency identification; of monetary policy shocks. Weaker lenders can respond more if they face financial; frictions that easing alleviates. The estimates imply constraints on monetary policy; become more costly in financial crises featuring creditor asset losses, and that an additional benefit of monetary easing is that it weakens the causal, contractionary effect of; asset losses;

JEL codes

  • E44: Financial Markets and the Macroeconomy
  • E52: Monetary Policy
  • E58: Central Banks and Their Policies
  • G01: Financial Crises
  • G28: Government Policy and Regulation