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Keywords:credit markets OR Credit markets OR Credit Markets 

Speech
Banks and the Rise of Nonbanks in Credit Markets

Presentation at the Federal Reserve Bank of Atlanta's 29th Annual Financial Markets Conference 2025: Financial Intermediation in Transition, delivered by Nicola Cetorelli, Head of Financial Intermediation, Federal Reserve Bank of New York.
Speech

Working Paper
Credit access and relational contracts: An experiment testing informational and contractual frictions for Pakistani farmers

https://www.federalreserve.gov/econres/ifdp/credit-access-and-relational-contracts.htm
International Finance Discussion Papers

Working Paper
Finance and Inequality : The Distributional Impacts of Bank Credit Rationing

We analyze reductions in bank credit using a natural experiment where unprecedented flooding differentially affected banks that were more exposed to flooded regions in Pakistan. Using a unique dataset that covers the universe of consumer loans in Pakistan and this exogenous shock to bank funding, we find two key results. First, banks disproportionately reduce credit to new and less-educated borrowers, following an increase in their funding costs. Second, the credit reduction is not compensated by relatively more lending by less-affected banks. The empirical evidence suggests that adverse ...
International Finance Discussion Papers , Paper 1211

Working Paper
Corporate stress and bank nonperforming loans: Evidence from Pakistan

Using detailed administrative Pakistani credit registry data, we show that banks with low leverage ratios are both significantly slower and less likely to recognize a loan as nonperforming than other banks that lend to the same firm. Moreover, we find suggestive evidence that this lack of recognition impedes loan curing, with banks with low leverage ratios reporting significantly higher final default rates than other banks for the same borrower (even after controlling for differences in loan terms). Our empirical findings are consistent with the theoretical prediction that classifying a ...
International Finance Discussion Papers , Paper 1327

Economic Uncertainty, Rising Interest Rates Challenge Banks

Elevated funding costs and tightening credit markets point to the need for bankers and bank supervisors to remain vigilant.
On the Economy

Journal Article
Optimal Monetary Policy for the Masses

We study nominal GDP targeting as optimal monetary policy in a simple and stylized model with a credit market friction. The macroeconomy we study has considerable income inequality, which gives rise to a large private sector credit market. This is an important credit market friction because households participating in the credit market use non-state-contingent nominal contracts (NSCNC). We extend previous results in this model by allowing for substantial intra-cohort heterogeneity, which is substantial enough that we can approach measured Gini coefficients for income, financial wealth, and ...
Review , Volume 107 , Issue 10

Speech
Credit growth and economic activity after the Great Recession

Remarks at the Economic Press Briefing on Student Loans, Federal Reserve Bank of New York, New York City
Speech , Paper 165

Journal Article
President's Message: Reassessing Monetary Policy at the Zero Lower Bound

What should monetary policymakers do when the policy rate is effectively at zero? Several colleagues and I have released a working paper that we hope will contribute to the ongoing debate on this question.
The Regional Economist , Issue July

Working Paper
The Macroeconomics of Labor, Credit and Financial Market Imperfections

An increasing share of corporate loans, a critical source of firm credit, are sold off banks’ balance sheets and actively traded in a secondary over-the-counter market. We develop a microfounded equilibrium search-theoretic model with labor, credit and financial markets to explore how this secondary loan market affects the real economy, highlighting a trade-off: while the market reduces the steady-state level of unemployment by 0.6pp, it amplifies its response to a 1% productivity drop from 3.6% to 4.3%. Secondary market frictions matter significantly: eliminating them would not only reduce ...
Working Papers , Paper 2409

Working Paper
Domestic Debt and Sovereign Defaults

This paper examines how domestic holdings of government debt affect sovereign default risk and government debt management. I develop a dynamic stochastic general equilibrium model with both external and domestic debt that endogenously generates output contraction upon default. Domestic holdings of government debt weaken investors' balance sheets and induce a contraction of credit and output upon default. I calibrate the model to the Argentinean economy and show that the model reproduces key empirical moments. Introducing domestic debt also yields relevant normative implications. While ...
International Finance Discussion Papers , Paper 1153

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