Date of Award

Spring 2026

Document Type

Thesis

Degree Name

Bachelor of Science (BS)

Department

Economics

First Advisor

Sanchit Shrivastava

Second Advisor

Smriti Tiwari

Abstract

This paper examines how the growth of private credit affects the transmission of monetary policy through the bank lending channel. Distributed lag regressions are estimated using monthly U.S. data from 2020 to 2025, relating changes in the Secured Overnight Financing Rate (SOFR) to growth in commercial and industrial (C&I) lending. To capture variation in credit market structure, the specification allows the response of bank lending to differ across periods of high and low private credit issuance. The results indicate that monetary policy continues to affect bank lending with a delay, consistent with the traditional bank lending channel. However, there is limited evidence that private credit weakens the magnitude of this response. Instead, the estimates suggest that private credit alters the timing of transmission, with the effects of monetary tightening becoming more concentrated at earlier horizons when private credit activity is elevated. These findings imply that changes in the composition of credit supply may reshape the dynamic propagation of monetary policy without necessarily diminishing its overall impact, with implications for the interpretation and calibration of policy in a more heterogeneous financial system.

Download

Included in

Economics Commons

Share

COinS