investigate two increasingly significant margins of adjustment in credit markets: banks' ability to sell loans and shadow bank … following bank capital shock. Recovery is also faster, because profitable loan sales (e.g., securitization) allow banks to build …Existing macroeconomic models focused on bank balance sheet lending are deficient because they do not account for the …

We propose a novel mechanism, "financial dampening," whereby loan retrenchment by banks attenuates the effectiveness of … monetary policy. The theory unifies an endogenous supply of illiquid local loans and risk-sharing among subsidiaries of bank … exploiting linkages through BHC-internal capital markets across spatially-separate BHC member-banks. We estimate that retrenching …

that makes risky long-term loans to firms, funded by deposits from savers. Government guarantees create a role for bank …-economic volatility. They redistribute wealth from savers to the owners of banks and non-financial firms. Current capital requirements are …