Professor from EBAPE presents paper at ASSA 2025 Meetings in San Francisco

Notícia

Professor from EBAPE presents paper at ASSA 2025 Meetings in San Francisco

 

 

Lars Norden (FGV EBAPE & EPGE, coordinator of the Center for Banking and Finance Research in Rio) presented the paper “Relationship Lending and Monetary Policy Shocks: Evidence from the U.S.” (co-authored with Allen Berger, Christa Bouwman, Raluca Roman, Teng Wang and Gregory Udell) at the IBEFA-ASSA 2025 Annual Meeting in San Francisco, CA, USA in early January. In that paper, the authors investigate monetary policy transmission in the presence of relationship lending. Analyzing confidential loan-level supervisory data for C&I loans from the Federal Reserve, they find U.S. banks dampen transmission of monetary policy tightening shocks to relationship borrowers by about 40 percent. The effect is driven by banks better able to absorb these shocks (banks that are large, highly reliant on deposits, with low deposit betas, and high liquidity ratios) and market structure and conditions (when bank competition or monetary policy uncertainty are high). The evidence highlights an important yet overlooked dampening effect on monetary policy transmission and significant benefits for relationship borrowers.

To read the working paper, click here.