What Do a Million Observations on Banks Say about the Transmission of Monetary Policy?
Kashyap, Anil K., and
Jeremy C. Stein. 2000. "What Do a Million Observations on Banks Say about the Transmission of Monetary Policy?."
American Economic Review,
We study the monetary-transmission mechanism with a data set that includes quarterly observations of every insured U.S. commercial bank from 1976 to 1993. We find that the impact of monetary policy on lending is stronger for banks with less liquid balance sheets--i.e., banks with lower ratios of securities to assets. Moreover, this pattern is largely attributable to the smaller banks, those in the bottom 95 percent of the size distribution. Our results support the existence of a "bank lending channel" of monetary transmission, though they do not allow us to make precise statements about its quantitative importance.
Article Full-Text Access
Kashyap, Anil K. (U Chicago, Federal Reserve Bank of Chicago, and NBER)
Stein, Jeremy C. (MIT and NBER)
E52: Monetary Policy
E44: Financial Markets and the Macroeconomy
G21: Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages