WORKING PAPERS
Albuquerque, B., Cerutti, E., Chen, N. and Firat, M. (2025), IMF Working Paper WP/25/96, Washington, D.C, International Monetary Fund. Submitted.
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The growing role of nonbanks in corporate credit intermediation raises important yet underexplored questions about the transmission of monetary policy (MP) and macroprudential policy (MaPP) to the real economy. Using syndicated loan data, we examine the impact of both MP and MaPP shocks on credit supply to nonfinancial firms. We show that nonbanks act as shock absorbers, cushioning firms—particularly those with preexisting nonbank relationships—from policy tightening. These shocks drive credit away from weaker banks toward nonbanks, raising concerns about credit quality. We also provide evidence that MaPPs on banks can lead them, especially weaker ones, to shift lending to nonbanks and away from nonfinancial corporations. This allows nonbanks to expand their footprint in corporate credit markets. Our findings highlight that the side effects of tighter MP and MaPP are non-trivial as credit intermediation migrates to a sector largely outside the regulatory perimeter, posing new financial stability risks.
Albuquerque, B., Cerutti, E., Kido, Y. and Varghese, R. (2025), IMF Working Paper WP/25/50, Washington, D.C, International Monetary Fund. Submitted.
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This paper shows that not all housing price cycles are alike. The nature of the housing expansion phase—especially whether a housing price boom characterized by rapid and persistent house price growth is present—plays a key role in shaping the severity of the subsequent contraction, and the net macroeconomic impact over the full cycle. Analyzing 180 housing expansions across 68 countries, we classify 49 percent as housing booms, characterized by rapid and persistent real house price increases. We find that economic downturns are significantly deeper and longer when housing contractions are preceded by a housing boom. The housing contraction is more severe the more intensive the preceding housing boom, and when accompanied by a credit boom. Overall, while housing booms spur stronger economic growth during the expansion phase, their sharp reversals lead to severe housing contractions, resulting in significant net negative effects on the real economy.
Albuquerque, B. and Mao, C. (2023), IMF Working Paper WP/23/192, September. Resubmitted to Management Science.
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We identify a new channel in the monetary policy transmission to nonfinancial corporates—the zombie lending channel. Our findings show that unviable and unproductive zombie firms are less affected by contractionary monetary policy relative to other firms due to a more muted tightening in credit conditions. We rationalize this result with a strengthening in evergreening motives when interest rates rise: lenders face incentives to extend loans to zombies to prevent them from defaulting. Strengthening banks’ balance sheets and curbing risky lending behavior could help mitigate zombie lending practices when financial conditions tighten.
WORK IN PROGRESS
Banking on nonbanks
Albuquerque, B., Cerutti, E., Firat, M. and Kagerer, B (work in progress).
Bonding through crisis: the role of nonbanks
Albuquerque, B., Becker, J. and Firat, M. (work in progress).