Big Techs and the Credit Channel of Monetary Policy

Abstract
We study how Big Techs' entry into finance affects the macroeconomy and the transmission of monetary policy. We first document a set of stylized facts on big tech credit. We then rationalize this evidence through the lens of a model where Big Techs facilitate firms' matching on the trade platform and extend working capital loans, thus adding another source of finance to bank loans. The Big Tech reinforces credit repayment with the threat of exclusion from its ecosystem, while bank credit is secured against collateral. According to our model: (i) a rise in Big Techs' matching efficiency increases the value for firms of trading on the e-commerce platform and the availability of big tech credit, alleviating both matching and credit frictions; (ii) the reaction of aggregate credit and output to a monetary policy shock depends on the elasticity of firms' future profits from operating on the e-commerce platform relative to that of physical collateral value. Joint with F. De Fiore (BIS) and L. Gambacorta (BIS)).