This paper surveys recent work that relates to the "lending" view of monetary policy transmission. It has three main goals: 1) to explain why it is important to distinguish between the lending and "money" views of policy transmission; 2) to outline the microeconomic conditions that are needed to generate a lending channel; and 3) to review the empirical evidence that bears on the lending view.
*Published: This paper was subsequently published as Monetary Policy and Bank Lending, Anil K. Kashyap, Jeremy C. Stein, in NBER book Monetary Policy (1994)
Monetary Policy, ed. N. Gregory Mankiw, University of Chicago Press, 1994
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