This paper analyzes the implications of the gradual rise in bank concentration since the 1990s for the transmission of monetary policy. I use branch-level data on deposit and loan rates to evaluate the monetary policy pass-through conditional on the level of local bank concentration and bank...

High-frequency changes in interest rates around FOMC announcements are an important tool for identifying the effects of monetary policy on asset prices and the macroeconomy. However, some recent studies have questioned both the exogeneity and the relevance of these monetary policy surprises as...

High-frequency changes in interest rates around FOMC announcements are an important tool for identifying the effects of monetary policy on asset prices and the macroeconomy. However, some recent studies have questioned both the exogeneity and the relevance of these monetary policy surprises as...

The Eurosystem’s Public Sector Purchase Programme (PSPP) increased the scarcity of safe assets, which caused significant declines and substantial dispersion in European repo rates. However, banks holding these safe assets benefited from this development: First, using the German security...

This paper presents an overview of the channels of monetary transmission and their manifestation in Bulgaria - a country in a currency board arrangement - in the first five years after the introduction of the regime. The presence of such a mechanism of transmission requires some form of...

Monetary policy aims at affecting corporate borrowing by influencing the marginal costs of firms, but its potency can be conditioned by the degree of market competition. We first identify conditions under which changes in marginal costs may have different effects on credit constraints and output...

This paper studies monetary policy transmission through BigTech and traditional banks. By comparing business loans made by a BigTech bank with those made by traditional banks, it finds that BigTech credit amplifies monetary policy transmission mainly through the extensive margin. Specifically,...

Environmental, social and governance (ESG) funds are among the fastest growing investment styles. ESG funds can be used either to only mitigate risk (input ESG) or to go beyond that to create impact (output ESG). We argue that the governance by ESG is characterised by three potential...

This paper empirically examines the effect of corporate market power on monetary policy transmission in Asia. Using panel local projections based on a firm-level dataset for 11 advanced and emerging Asian economies, we find that after a monetary policy tightening, the real sales of firms with...

In this paper, I investigate how the Net-Zero transition affects the transmission of monetary policy. I first document an upward trend in environmental performance among US publicly listed companies over the last decade. Second, I evaluate the implications of firms becoming `greener' for the...

Despite the implementation of negative nominal interest rates by several advanced economies in the last decade and the many papers that have been written about this novel policy tool, there is still much we do not know about the effectiveness of this instrument. The pass-through of negative...

Motivated by the dominant role of the US dollar, we explore how monetary policy (MP) shocks in the US can affect a small open economy through the expectation channel. We combine data from a panel survey of firms' expectations in Uruguay with granular information about firms' debt position and...

In contrast to the more typical monthly series, Reserve Bank of Australia data offer a high frequency window into central bank actions following the onset of the pandemic. Daily observations demonstrate not only the absolute size of the Reserve Bank’s open market purchases but also a dramatic...

What is the role of macroeconomic uncertainty in the monetary transmission mechanism? This paper provides euro area evidence that a policy induced increase in uncertainty accounts for a substantial share in the economic contraction following a monetary policy shock. Our results suggest that...

I study the role of firm heterogeneity for the transmission of unconventional monetary policy in the form of "credit policy" à la Gertler and Karadi (2011). To this end, I lay out a Two-Agent New-Keynesian model with financially constrained and unconstrained firms and a financial intermediary...

This study empirically analyzes the MPTM through bank’ balance sheet in Pakistan for the period of 2008-2018. The data set consists of 22 conventional banks and 18 Islamic banks (5 full-fledged and 13 Islamic windows of conventional banks) of Pakistan. The study employs the robust two-step...

This working paper is written by Desislava Andreeva (European Central Bank), Andra Coman (European Central Bank), Mary Everett (Central Bank of Ireland), Maren Froemel (Bank of England), Kelvin Ho (Hong Kong Monetary Authority), Simon Lloyd (Bank of England), Baptiste Meunier (European Central...

This article examines the impact of monetary policy (MP) on firms across CO2 emissions. We provide a theoretical model in which green firms are less sensitive to MP shocks than brown firms, because they are less exposed to transition risk and provide non-pecuniary utility to investors. We test...

Corporate taxation can have re-distributive effects on income and wealth. We hypothesize and empirically establish such an effect working via bank credit. Using a unique sample of majority-owned firms that apply for credit, we show that after a decrease in corporate tax rates the relatively poor...

Corporate agility – ability to respond quickly and effectively to business environment changes – is crucial for firms’ success. While important, this concept is difficult to measure and use in quantitative research. We develop a reliable measure of agility by applying the latest machine...

This paper studies the impact of monetary policy on the credit allocation of globally operating banks. First, we document that, at the country level, banks’ bias toward domestic lending fell in the early 2000s but increased by 10% during the low interest rate period after the Global Financial...

The link between money creation and inflation has been theoretically demonstrated, but different inflation responses to Federal Reserve activity after the Great Recession and COVID recession showed the incomplete nature of the theory. We model a ``fiscal transmission mechanism'' whereby Federal...

We quantify the sovereign-bank doom loop by using the 1999 Marmara earthquake as an exogenous shock leading to an increase in Turkey's default risk. Our theoretical model illustrates that for banks with higher exposure to government securities, a higher sovereign default risk implies lower net...

Foreign price shocks have significant effects on functional income distribution and on inflation inequality. By increasing prices in domestic currency that are linked to foreign prices, they increase the profit share in some sectors and reduce real wages, in particular of workers whose...

This paper analyzes the implications of the gradual rise in bank concentration since the 1990s for the transmission of monetary policy. I use branch-level data on deposit and loan rates to evaluate the monetary policy pass-through conditional on the level of local bank concentration and bank...

This paper studies monetary policy transmission through BigTech and traditional banks. By comparing business loans made by a BigTech bank with those made by traditional banks, it finds that BigTech credit amplifies monetary policy transmission mainly through the extensive margin. Specifically,...

Spillovers play a crucial role in driving monetary policy around the world. The literature focuses predominantly on spillovers from the Federal Reserve. Less attention has been paid to spillovers from other central banks. I measure the degree to which 20 central banks cause spillovers. I show...

In this paper, we examine how carry trade activity affects the transmission of monetary policy in currency markets. We analyze a large set of currencies against the U.S. dollar. The U.S. dollar appreciates in response to a conventional monetary policy shock but depreciates to an information...

The paper studies how firms’ cash balances affect the supply of bank credit and the transmission of monetary policy via the bank-lending channel. We empirically show that banks view firm liquidity favorably since it is associated, on average, with cheaper bank funding and with a credit...

We show that trade credit in production networks is important for the transmission of unconventional monetary policy. We find that firms with bonds eligible for purchase under the European Central Bank’s Corporate Sector Purchase Program act as financial intermediaries and extend more trade...