- "The claim that disruptions to the banking system necessarily destroy the ability of nonfinancial businesses to borrow from households is highly questionable."
- The data show no decline in bank lending to nonfinancial business.
- Nonfinancial business are issuing commercial paper at quite low interest rates.
- The volume of interbank loans continues to be quite high.
As I noted in an earlier post, I am wondering whether (2) is bank-driven or customer-driven. Nevertheless, it seems at odds with the simple view that banks are just cutting off credit.
I would not have guessed (4), which raises an interesting question: if we ultimately conclude that the banking crisis did not impact the nonfinancial economy, is it because (a) the banking sector does not significantly impact the nonfinancial sector, or (b) the crisis is not even a big deal within the banking sector, or (c) both?
Please note that Professors Chari, Christiano, and Kehoe and are affiliated with the Federal Reserve Bank of Minneapolis. They are more qualified than I (or, if not, have ready access to Fed personnel who are) to appreciate the intricacies of Federal Reserve data. Their findings should be given significant weight.