From Banks to Nonbanks: Macroprudential and Monetary Policy Effects on Corporate Lending

IMF Working Papers, May 23, 2025

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Research question: How do monetary policy (MP) and macroprudential policies (MaPP) jointly affect credit supply to nonfinancial firms in the context of a growing role for nonbanks in corporate credit intermediation?
Data used: syndicated loan data.

Nonbanks act as shock absorbers, cushioning firms—particularly those with existing nonbank relationships—from policy tightening.
MP and MaPP shocks drive credit away from weaker banks toward nonbanks, raising concerns about credit quality.
MaPPs on banks can lead banks, especially weaker banks, to shift lending to nonbanks and away from nonfinancial corporations, facilitating nonbanks’ expansion in corporate credit markets.
Overall implication: tighter MP and MaPP may unintentionally push credit intermediation into a sector largely outside the regulatory perimeter, posing new financial stability risks.

Interactions between MP and MaPP can reallocate corporate credit across regulated banks and less-regulated nonbanks.
Regulatory perimeter considerations: migration of credit intermediation to nonbanks could create financial stability vulnerabilities that current bank-focused MaPP frameworks do not address.
Credit quality risk: movement of lending from weaker banks to nonbanks raises concerns about the monitoring, risk-assessment, and resilience of credit extended to nonfinancial firms.