IMF Working Papers

The growing role of nonbanks in corporate credit intermediation raises important but underexplored questions about how both monetary policy (MP) and macroprudential policies (MaPP) affect lending and the real economy. Using syndicated loan data, we examine the joint impact of MP and MaPP shocks on credit supply to nonfinancial firms. Our findings show that nonbanks act as shock absorbers, cushioning firms—particularly those with existing nonbank relationships—from policy tightening. We also find that these shocks drive credit away from weaker banks toward nonbanks, raising concerns about credit quality. Finally, we provide evidence that MaPPs on banks can lead them, especially weaker banks, to shift lending to nonbanks and away from nonfinancial corporations. This allows nonbanks to expand their role in corporate credit markets. Overall, our findings highlight that tighter MP and MaPP may unintentionally push credit intermediation into a sector largely outside the regulatory perimeter, posing new financial stability risks.