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David's avatar

Recommend to Google a study on nonbank lending. The Rise of Finance Companies and FinTech Lenders in Small Business Lending

Manasa Gopal Philipp Schnabl

Food for thought, looks like academia is saying it adds credit and has an effect on growth. May be one reason FED ignores m2 for better or worse. Goldman has a write up sighting this study that concludes they believe it adds to growth and offsets bank lending to a significant degree. Just something to pay attention to.

/Users/himco/Desktop/SSRN-id3600068.pdf

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David's avatar

Nice summary. Thank you for your work. Question: Is M2 a little less relevant with non bank lending has been growing so much? I know from a theoretical view point it is not new money but there are recent studies suggesting it matters quite a bit. Creating new credit in the system. Also does the yield curve inversion matter less with the change in the banking system from a reserve requirement regime to an ample reserve regime. Banks no longer borrow short and lend long technically because they do not borrow in the FF market. They did not raise, in general, deposit rates with increasing FF rate. Also IOER was a bit of a game changer. Just wondering if this is why the monetary view point has called the recession too early. Thanks for any thoughts.

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