Risk-taking and monetary policy transmission: evidence from loans to SMEs and large firms

Category: Macro Seminar
When: 07 Juni 2022
, 14:15
 - 15:30
Where: Online
Speaker: Şebnem Kalemli-Özcan (University of Maryland)

Title: Risk-taking and monetary policy transmission: evidence from loans to SMEs and large firms.

Abstract: Using administrative firm-bank-loan level data, we document new facts about the U.S. credit market and monetary policy transmission. Private firms that are mostly small-medium-size- enterprises (SMEs) borrow from banks and use their enterprise’s continuation value as collateral. Relative to large publicly listed firms, monetary expansions increase highly levered SMEs’ demand for credit and their borrowing capacity because their continuation values rise and their ability to repay debt improves. Our results imply that the effectiveness of monetary policy depends on both the firm-size distribution and the type of collateral pledged.

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