Households Credits, Financial Intermediation and Monetary Policies

This paper develops a theoretical model of financial intermediation with three original characteristics. Firstly, all sectors are taken into account within total outstanding credits, including households. Secondly, in periods of high financial strains, the relationship between prices and funding supply volumes may be non-monotonic. Finally, the occurrence of interbank credit rationing results in other sectors’ funding rationing in credit and securities markets. The central bank conducts a non-standard type monetary policy. We show that the characteristics of financial intermediation then determine the magnitude of transmission of a shock on households financing costs and the content of the resulting monetary policy.