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

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;

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