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The growing role of nonbanks in corporate credit intermediation raises important yet
underexplored questions about the transmission of monetary policy (MP) and macroprudential
policy (MaPP) to the real economy. Using syndicated loan data, we find that
nonbanks act as shock absorbers, cushioning nonfinancial firms from both MaPP and MP
tightening. These shocks drive credit away from weaker banks toward nonbanks, raising
concerns about credit quality. Our findings highlight that the side effects of tighter MaPP
and MP are nontrivial as credit intermediation migrates to a sector largely outside the
regulatory perimeter, posing new financial stability risks.
