Specialized Banks and the Transmission of Monetary Policy
Gianmarco Ruzzier
Abstract
Using granular bank-firm data from the Spanish credit register and U.S. syndicated loans, I examine the impact of banks' sectoral specialization on credit supply decisions in response to monetary policy shocks. Following an expansionary monetary policy, banks significantly increase lending to firms in sectors where they specialize. A 25 basis point rate reduction leads specialized banks to increase credit by 1.2-1.4 percentage points more to firms in their sectors of expertise, with effects peaking after one year. This result holds across both the Spanish lending market and the U.S. syndicated one. The mechanism operates through information advantages: the specialization effect is stronger for opaque borrowers, and specialized banks experience lower default rates following monetary easing. These supply decisions have real effects, as firms with greater exposure to specialized lenders exhibit larger increases in investment and profitability during expansionary periods. The findings show that monetary policy transmission varies systematically across sectors depending on the distribution of bank specialization.
Citation
Ruzzier, Gianmarco. "Specialized Banks and the Transmission of Monetary Policy." Working paper, September 2025.
Latest Version
This page is the canonical landing page for the latest version of the paper. The stable PDF is available at https://gianmarcoruzzier1.github.io/jmp_draft/specialized-banks-monetary-policy.pdf.