Credit spreads rise after a monetary policy tightening, yet spread reactions are heterogeneous across firms. Exploiting … with high leverage experience a more pronounced increase in credit spreads than firms with low leverage. A large fraction … of this increase is due to a component of credit spreads that is in excess of firms' expected default. Our results …

This paper studies episodes in which aggregate bank credit contracts alongside expanding economic activity-credit …--on average, they occur every five years. By comparison, banking crises take place every eight years on average. Credit reversals …