Xiang Li (Halle Institute for Economic Research) - How Does BigTech Credit Affect Monetary Policy Transmission?

Xiang Li (Halle Institute for Economic Research) - How Does BigTech Credit Affect Monetary Policy Transmission?

Co-authors: Yiping Huang (Peking University), Han Qiu (Bank for International Settlements) and Changhua Yu (Peking University)

Abstract
This paper investigates whether and how BigTech credit works differently from bank credit in transmitting monetary policy. Through the lens of a unique dataset covering the full borrowing history of sampled firms from both BigTech and traditional bank lenders in China, we compare the extensive and intensive margin by the two types of lenders in reaction to monetary policy changes to the same firm at the same time. We find that the BigTech lender is more responsive to monetary policy changes in the extensive margin but not the intensive margin, and advantages in data abundance, screening and monitoring of the BigTech credit are the possible mechanisms. Moreover, the use of BigTech credit is also associated with a stronger real effects from monetary policy.

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