"Monetary Policy and the Trade Credit Practices of Business Firms"

Monetary policy operates on bank portfolios by influencing the quantity and/or composition of banks' assets. As a result the relative prices or yields of particular assets change and banks are encouraged to make further shifts in their portfolio composition« Some economists and many lay critics have claimed that there is discrimination against small firms when money is tightened through this process. The increased share of bank loans, better access to long term capital markets, and proportionately greater retained earnings of large firms have been offered as evidence of such discrimination