Talk:Credit channel

Dr. McMahon's comment on this article
Dr. McMahon has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

"In terms of the bank lending channel, I tend to think about the channel acting through making available cheap liabilities (deposits) which makes banks more willing to lend out. The application of the financial accelerator channel to Bank is much more recent and some work due to Piti Disyatat (JMCB, 2011 - https://ideas.repec.org/a/mcb/jmoncb/v43y2011i4p711-734.html). This article seems to emphasise the latter without discussion of the former where it writes: "The bank lending channel is essentially the balance sheet channel as applied to the operations of lending institutions.""

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Dr. McMahon has published scholarly research which seems to be relevant to this Wikipedia article:


 * Reference : Butt, Nick & Churm, Rohan & McMahon, Michael & Morotz, Arpad & Schanz, Jochen, 2014. "QE and the bank lending channel in the United Kingdom," Bank of England working papers 511, Bank of England.

ExpertIdeasBot (talk) 18:15, 27 June 2016 (UTC)

Dr. Chen's comment on this article
Dr. Chen has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

"The article provides a detailed summary about how the monetary policies affect the real economy via the credit channel. Specifically, the credit channel works through the balance sheet effect of the borrowers or the bank lending channel of the lending institutions. In the last section, the articles summarize the empirical evidence supporting the above mentioned channels, through which monetary policies affect the real economy.

Overall, the description of the credit channels is appropriate. I would, however, suggest that the article revise in the following two points.

1. In the Section on "Bank Lending Channel," the article claims that " The bank lending channel is essentially the balance sheet channel as applied to the operations of lending institutions." I somehow disagree with this statement. According to the classical view of bank lending channel, monetary policy has a direct effect on the supply of bank loans, and thus on the real economy, because banks finance loans in part with liabilities that carry reserve requirements. In other words, reserve requirement serves as a tax on banks' demand deposit, not banks' capital, and thus the lending capacity. This is in contrast to the above-mentioned balance sheet effect, under which the firms' net worth (capital) plays a crucial role for their borrowing capacity.

2. For the section on "Empirical Evidence," it will be nice if the article can summarize the classical papers on testing the bank lending channels, before moving on to the recent empirical test of bank lending channel using mortage lending market. These classical articles include, among others, Bernanke and Blinder (1992) and Kashyap and Stein (1995).

Reference:

Bernanke, Ben and Alan Blinder. 1992. "The Federal Funds Rate and the Channels of Monetary Transmission." American Economic Review, 82(4), 901-921

Kashyap, Anil K., and Jeremy C. Stein. 1995."The Impact of Monetary Policy on Bank Balance Sheets.” Carnegie-Rochester Conference Series on Public Policy 42: 151-95."

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We believe Dr. Chen has expertise on the topic of this article, since he has published relevant scholarly research:


 * Reference : Chen, Kaiji and Zheng Song (2013), “Financial Frictions on Capital Allocation: A Transmission Mechanism of TFP Fluctuations,” Journal of Monetary Economics, Vol. 60, 683-703.

ExpertIdeasBot (talk) 15:21, 11 July 2016 (UTC)

Dr. Rubio's comment on this article
Dr. Rubio has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

"The balance sheet channel can also manifest itself via consumer spending on durables and housing. These types of goods tend to be illiquid in nature. If consumers need to sell off these assets to cover debts they may have to sell at a steep discount and incur losses. Consumers who hold more liquid financial assets such as cash, stocks, or bonds can more easily cope with a negative shock to their income. Consumer balance sheets with large portions of financial assets may estimate their probability of becoming financially distressed as low and are more willing to spend on durable goods and housing. Monetary policy changes that decrease the valuation of financial assets on consumers' balance sheets can result in lower spending on consumer durables and housing. REFERENCE: Iacoviello, Matteo (2005), “House Prices, Borrowing Constraints and Monetary Policy in the Business Cycle”, American Economic Review, Vol. 95, No. 3 (June), pp. 739-764."
 * See Iacoviello (2005) for the first article that explores this idea in a general equilibrium framework****

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We believe Dr. Rubio has expertise on the topic of this article, since he has published relevant scholarly research:


 * Reference : Jose A Carrasco-Gallego & Margarita Rubio, 2013. "Macroprudential Measures, Housing Markets and Monetary Policy," Discussion Papers 2013/05, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).

ExpertIdeasBot (talk) 17:07, 14 July 2016 (UTC)