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Monetary Policy under Heterogeneity: Lessons From SMEs and COVID-19 Pandemiс

January 20, 2022



VIDEO Jan 20, 2022


  • Many argue that “too low for too long" interest rates, aimed at stimulating the economy in the short run, might lead to low productivity and threaten financial stability in the medium run. Low interest rates not only lead to more borrowing, but they also affect the quality of that borrowing via allocation of credit across firms. Thus, expansionary monetary policy might bring higher credit growth, investment, and output today, at the expanse of a corporate debt overhang with zombie firms, and a higher probability of financial crises, hampering investment and growth in the future.

    Recent analysis of a new confidential supervisory firm-bank matched data set documents new facts about the credit market. Does monetary policy work the same way for SMEs and large listed firms in terms of credit borrowed and interest rate paid? Do firms and banks with high or low leverage respond similarly to monetary policy surprises? Do different types of collateral pledged by different firms have any effect? These questions and related policy implications will be discussed during this session.

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    Dr. Şebnem Kalemli-Özcan

    Neil Moskowitz Endowed Professor of Economics and Finance, University of Maryland

    Dr. Şebnem Kalemli-Özcan is Neil Moskowitz Endowed Professor of Economics at University of Maryland, College Park. She is a Research Associate at the National Bureau of Economic Research (NBER) and a Research Fellow at the Center for Economic Policy Research (CEPR). She was the Duisenberg Fellow at the European Central Bank in 2008 and Lead Economist/Adviser for the Middle East and North Africa Region at the World Bank during 2010-11. She has held positions as a Visiting Professor at Bilkent University, Koc University and at Harvard University. She was the Houblon-Norman Fellow of Bank of England and CFR International Affairs Fellow in International Economics based at the Federal Reserve Board and International Monetary Fund. Currently, she is the co-editor of Journal of International Economics and serves at the editorial board of American Economic Review.


    Franziska Lieselotte Ohnsorge

    Manager, Prospects Group

    Franziska Lieselotte Ohnsorge is Manager of the Prospects Group in the Equitable Growth, Finance and Institutions (EFI) Practice Group at the World Bank. Prior to joining the World Bank, Franziska Lieselotte Ohnsorge worked in the Office of the Chief Economist of the European Bank for Reconstruction and Development on regional surveillance, forecasting, and financial sector policy issues. She was previously at the International Monetary Fund, covering a range of Asian, European and Central Asian economies. She has published on a variety of topics.


    Sandeep Mahajan


    Sandeep Mahajan is a Practice Manager in the World Bank’s Macroeconomic, Trade, and Investment Global Practice, responsible for the Europe and Central Asia region. He has held various positions at the World Bank, including adviser to the Managing Director and Senior Vice President for Operations, Lead Economist for Vietnam and Lead Economist for South Africa. Sandeep has led the Bank’s policy dialogue with client countries on a broad range of economic management issues, managed large budget support operations, and undertaken substantial and innovative analytical work on several challenging development issues. His research interests and publications cover economic growth, macroeconomics, financial & private sector development, and trade policy.


  • Date:: January 20, 2022
  • Time: : 10:00 AM -11:30 AM EST
  • Chair: : Asli Demirgüç-Kunt, Chief Economist, Europe and Central Asia, World Bank