I use loan-level data on mortgage applications and the monetary easing of 2008 in the United States to identify the effect of credit concentration on the transmission of monetary policy. Lenders expanded credit less in more concentrated counties. Within counties, lenders with the highest market power had the strongest mitigating impact on credit growth. The credit concentration channel is economically significant and distinct from the deposits channel of monetary policy transmission. Its influence is ubiquitous: it affects both new loans and refinances, operates through both depository and non-depository institutions, and impacts lender supply across the spectrum of market positions.
Watch and join us at Live Chat: Seminar will be live-streamed, allowing for online audience participation (only available during the seminar)