Is there a bank lending channel for monetary policy

Abstract

Using data for the U.S. manufacturing sector, we investigate the existence of a credit channel for monetary policy that operates through bank lending. Our test is based on the behavior of the mix of bank and nonbank debt after a shift in monetary policy. We allow for a differential response to monetary policy of the debt mix for small firms and large firms, and we account for movements in all major types of nonbank debt (including trade credit and long-term debt). In contrast to earlier work, we find no support for a bank lending channel.