Seminar

Big Techs and the Credit Channel of Monetary Policy

Fiorella De Fiore (BIS)

September 5, 2023, 11:30–12:30

BDF, Paris

Room 3 Espace Conférence and Online

Séminaire Banque de France

Abstract

We document some stylized facts on big tech credit and rationalize them through the lens of a model where big techs facilitate matching on the e-commerce platform and extend loans. The big tech reinforces credit repayment with the threat of exclusion from the platform, while bank credit is secured against collateral. Our model suggests that: (i) a rise in big techs’ matching efficiency increases the value for firms of trading on the platform and the availability of big tech credit; (ii) big tech credit mitigates the initial response of output to a monetary shock, while increasing its persistence; (iii) the efficiency gains generated by big techs are limited by the distortionary fees collected from users.

Keywords

Big Techs, Monetary policy, Credit frictions;

JEL codes

  • E44: Financial Markets and the Macroeconomy
  • E52: Monetary Policy
  • E51: Money Supply • Credit • Money Multipliers
  • G21: Banks • Depository Institutions • Micro Finance Institutions • Mortgages
  • G23: Non-bank Financial Institutions • Financial Instruments • Institutional Investors