https://macropaperwarehouse.com/authors/eunkyung-lee/Eunkyung LeeHugo -- gohugo.ioen-usThu, 01 Jan 2026 00:00:00 +0000https://macropaperwarehouse.com/papers/the-transmission-of-monetary-policy-to-corporate-investment-the-role-of-loan-renegotiation/Thu, 01 Jan 2026 00:00:00 +0000https://macropaperwarehouse.com/papers/the-transmission-of-monetary-policy-to-corporate-investment-the-role-of-loan-renegotiation/<p><strong>Research question and motivation.</strong> This paper asks how monetary policy transmits to corporate investment through bank credit, and specifically whether the relevant credit margin is the origination of <em>new</em> loans (the channel emphasized by the traditional credit/bank-lending channel literature, e.g., Kashyap, Stein and Wilcox, 1993) or the <em>renegotiation</em> of existing loans. The motivation is institutional: in the U.S., almost 70% of corporate loan contracts are renegotiated prior to maturity, with firms renegotiating existing loans about twice as often as issuing new ones, and renegotiations typically alter loan amounts, spreads and maturities by 30%–40% of initial values. Prior work measured only new lending, disregarding these revisions. The author claims this is the first study to distinguish new loans from revisions of existing loan terms in the transmission channel.</p>