December 2021 issue contents
Monetary Normalizations and Consumer Credit: Evidence from Fed Liftoff and Online Lending

Christoph Bertsch, Isaiah Hull, and Xin Zhanga 


On December 16, 2015, the Federal Reserve initiated "liftoff," a critical step in the monetary normalization process. We use a unique panel data set of 640,000 loan-hour observations to measure the cross-sectional impact of liftoff on interest rates, demand, and supply in the peer-to-peer market for uncollateralized consumer credit. We find that the spread decreased by 17 percent, driven by an increase in supply. Our results are consistent with an investor-perceived reduction in default probabilities and suggest that liftoff provided a strong, positive signal about the future solvency of high credit risk borrowers.

JEL Code: D14, E43, E52, G21.

Full article (PDF, 47 pages)

Online appendix (PDF, 47 pages)

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