On the differential response of loans to shocks in the USA

This work aims to gain insights useful to explain the loan puzzle: the unexpected increase of loans to firms in case of a monetary tightening. To this end, we study loans from banks and non-bank lenders granted for alternative scopes to different groups of borrowers. This serves to unveil significant differences on how those respond to a shock and evaluate possible alternative explanations for such differences. The analysis is based on a vector auto-regression, estimated using Bayesian techniques, and has as object the US economy. Our findings support a supply-side explanation of the loan puzzle.