Jiménez Zambrano, GabrielOngena, StevenPeydró, José-LuisSaurina, Jesús2019-12-172019-12-172014Jiménez G, Ongena S, Peydró JL, Saurina J. Hazardous times for monetary policy: what do twenty-three million bank loans say about the effects of monetary policy on credit risk-taking?. Econometrica. 2014 Mar;82(2):463-505. DOI: 10.3982/ECTA101040012-9682http://hdl.handle.net/10230/43183We identify the effects of monetary policy on credit risk‐taking with an exhaustive credit register of loan applications and contracts. We separate the changes in the composition of the supply of credit from the concurrent changes in the volume of supply and quality, and the volume of demand. We employ a two‐stage model that analyzes the granting of loan applications in the first stage and loan outcomes for the applications granted in the second stage, and that controls for both observed and unobserved, time‐varying, firm and bank heterogeneity through time*firm and time*bank fixed effects. We find that a lower overnight interest rate induces lowly capitalized banks to grant more loan applications to ex ante risky firms and to commit larger loan volumes with fewer collateral requirements to these firms, yet with a higher ex post likelihood of default. A lower long‐term interest rate and other relevant macroeconomic variables have no such effects.application/pdfeng© The Econometric Society 2014. The copyright to this article is held by the Econometric Society, http://www.econometricsociety.org/. It may be downloaded, printed and reproduced only for personal or classroom use. Absolutely no downloading or copying may be done for, or on behalf of, any for-profit commercial firm or for other commercial purpose without the explicit permission of the Econometric Society. For this purpose, contact the Editorial Office of the Econometric Society at econometrica@econometricsociety.org.info:eu-repo/semantics/articlehttp://dx.doi.org/10.3982/ECTA10104Monetary policyFinancial stabilityCredit riskCredit supply compositionBank capitalinfo:eu-repo/semantics/openAccess