{
  "title": "Do Corporate Bond Shocks Affect Commercial Bank Lending?",
  "publication": "IMF Working Papers, August 4, 2023",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2023/08/03/do-corporate-bond-shocks-affect-commercial-bank-lending-537451",
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  "summary": "Understanding how corporate bond market disruptions are transmitted to the rest of the financial system is essential to gauge systemic financial risk and design policy responses.",
  "sections": [
    {
      "heading": "Summary and main finding",
      "content": "- Purpose: Understand how corporate bond market disruptions are transmitted to the rest of the financial system and to gauge systemic financial risk and design policy responses.\n- Main finding: Corporate bond market shocks can reduce commercial bank lending activity by tightening loan supply.\n- Implication: Policies designed to contain stress in the corporate bond market can mitigate systemic risk by limiting contagion to the commercial banking sector."
    },
    {
      "heading": "Methodology",
      "content": "- Model: Extension of the vector autoregression model of Gilchrist and Zakrajšek (2012) to explicitly account for the role of commercial banks in the transmission of corporate bond credit spread shocks.\n- Focus: Transmission of corporate bond credit spread shocks to commercial bank lending through loan supply channels."
    },
    {
      "heading": "Policy recommendations and implications",
      "content": "- Contain stress in the corporate bond market to mitigate systemic risk.\n- Limiting corporate bond market disruptions can reduce contagion to commercial banks and preserve bank lending activity.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2023/08/03/do-corporate-bond-shocks-affect-commercial-bank-lending-537451"
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    "Authors: Mario Catalan, Alexander W. Hoffmaister",
    "Published: August 4, 2023",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798400251368.001",
    "Purpose: Understand how corporate bond market disruptions are transmitted to the rest of the financial system and to gauge systemic financial risk and design policy responses.",
    "Main finding: Corporate bond market shocks can reduce commercial bank lending activity by tightening loan supply.",
    "Implication: Policies designed to contain stress in the corporate bond market can mitigate systemic risk by limiting contagion to the commercial banking sector.",
    "Model: Extension of the vector autoregression model of Gilchrist and Zakrajšek (2012) to explicitly account for the role of commercial banks in the transmission of corporate bond credit spread shocks.",
    "Focus: Transmission of corporate bond credit spread shocks to commercial bank lending through loan supply channels.",
    "Contain stress in the corporate bond market to mitigate systemic risk.",
    "Limiting corporate bond market disruptions can reduce contagion to commercial banks and preserve bank lending activity.",
    "**Working Paper**"
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