developing a new methodology to separate firms' credit shocks from loan supply shocks, using a vast sample of matched bank …-firm lending data. We decompose loan movements in Japan for the period 1990 to 2010 into bank, firm, industry, and common shocks … economy, which creates a role for granular shocks, as in Gabaix (2011). As a result, idiosyncratic bank shocks - movements in …

markets in bank holding companies to isolate plausibly exogenous variation in the financial constraints faced by subsidiary … banks. In particular, I demonstrate that affiliated bank loan growth is less sensitive to changes in the federal funds rate …