Research

Abstract: 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. 

This paper examines whether subsidized mortgage lending crowds out private bank mortgage activity. Using quarterly regional data from Kazakhstan (2015–2025), we exploit variation in exposure to Otbasy Bank’s subsidized mortgage programs within a staggered treatment framework to estimate dynamic responses of commercial bank lending. Increases in subsidized lending generate statistically significant short-run reductions in private mortgage issuance, with stronger effects in regions where Otbasy’s pre-existing market share is larger. However, impulse responses indicate that the displacement effect attenuates over time and does not lead to persistent structural crowding out. Subsequent program expansions trigger renewed but temporary substitution episodes. The findings suggest that subsidized housing finance can disrupt private credit supply in the short run without permanently displacing private lenders.  

We build an SOE-adjusted EBP index for China and quantify its marginal effect on multi-dimensional PBoC shocks identified from distributional properties. 

Abstract: Over the past 15 years, the Philippine economy has shifted inward, with growth and job creation increasingly concentrated in non-tradable sectors. This paper investigates how real exchange rate (REER) movements have contributed to this trend by disproportionately discouraging investment in tradable sectors. Using firm-level panel data from 389 publicly listed non-financial firms (2006–2023), we implement a difference-in-differences (DiD) framework to estimate investment responses to REER shocks. We find that while currency appreciation dampens investment overall, the effect is significantly more severe for tradable-sector firms, especially exporters. A one-unit REER appreciation reduces investment in tradables by 0.33 percentage points more than in non-tradables. Export-oriented firms exhibit the strongest contraction, reflecting competitiveness losses. In contrast, non-tradable firms are less affected or respond heterogeneously, benefiting from cheaper imports. Leverage is generally associated with higher investment, but this effect weakens during appreciation episodes. These findings highlight the macro-financial channel through which exchange rate dynamics shape capital allocation, potentially accelerating structural shifts away from tradables and constraining long-run productivity and export-led growth.

Abstract: This paper highlights how the Federal Reserve’s Secondary Market Corporate Credit Facility (SMCCF), launched in March 2020, influenced bank loan supply to private, bank-dependent firms through a distinct capital structure channel. Specifically, firms with bond market access increased bond issuance, allowing capital-constrained banks to expand lending to firms without such access. Using a theoretical model and loan-level data within an event study framework, this paper shows that this channel operates exclusively through banks facing capital constraints, while unconstrained banks exhibited no significant change in lending behavior. Although the overall spillover effects of the SMCCF were modest given the relatively strong capital positions of U.S. banks during the period, these findings underscore the importance of bank constraints in amplifying the transmission of corporate bond purchase programs to the broader credit market.