The Credit Channel and Monetary Policy During Pre- and Post-2008 Crisis: Evidence from Firm-Level Data in Korea

We find that the relationship between monetary policy and corporate borrowing spreads changed during the global financial crisis. This relationship is only significantly positive after the global financial crisis, which means that the credit channel is effective in Korea. As for the corporate asset size classification, this is only significant after the global financial crisis. As for the corporate equity ratio attribution, the coefficient of monetary policy for low-equity ratio companies is significant after the global financial crisis. In contrast, the coefficient for high-equity ratio companies is only significant after the global financial crisis. In addition, after the global financial crisis, the contraction of US monetary policy had a positive impact on the borrowing spreads of domestic companies. Coincidentally, the relationship between the above structural spread and US monetary policy reversed before the global financial crisis.