Loan commitments and monetary policy*

George Sofianos, Paul Wachtel, Arie Melnik

Research output: Contribution to journalArticlepeer-review


In this paper, we examine the impact of loan commitment agreements on the way in which monetary policy affects the economy. We estimate a vector autoregressive (VAR) model and find evidence of a smaller impact of monetary policy on loans made under commitment agreements than on loans not made under commitment. Our conclusion is that loan commitments effectively protect borrowers from quantity credit rationing and, thus, force monetary policy to work mainly through interest-rate channels.

Original languageEnglish
Pages (from-to)677-689
Number of pages13
JournalJournal of Banking and Finance
Issue number4
StatePublished - Oct 1990

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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