Using data on entrepreneurs' private wealth, small-business loan applications, and bank credit scores, we show that monetary policy changes the weight banks attach to private wealth in lending decisions. Among applicants receiving nearly identical credit assessments, monetary easing raises loan approval rates more for low-wealth entrepreneurs than for high-wealth entrepreneurs. Exploiting the bank's approval cutoff, we show that loan approval increases entrepreneurs' income and wealth. These findings imply monetary policy may influence the wealth distribution among entrepreneurs over time. Survey data from 19 euro area countries corroborate the findings and indicate that the channel operates through less liquid and weakly capitalized banks.

Why do firms obtain multiple lending products from the same bank? Exploiting the 2016 acquisition of two specialized lenders by a diversified French bank, we test whether multi-product borrowing arises from operational frictions (e.g., search costs) or from informational frictions, which give banks with existing product relationships an advantage over outside lenders. We find that, after the acquisition, only firms using high-information products from the acquired lenders start borrowing from the acquiring bank. Post-merger integration or cross-selling opportunities cannot explain this asymmetry. Our results show that broader scope helps banks retain borrowers by generating information, not by offering convenience.

This paper examines how populism shapes the transmission of monetary policy. Combining credit-registry and firm survey data from Germany with voter shares for the populist party AfD, I find that firms in high-populism districts hold elevated inflation expectations and revise them less in response to monetary policy surprises. Most strikingly, their credit demand response is similarly attenuated, indicating that populism significantly weakens the credit channel. An analysis of over 700,000 German-language tweets is consistent with a distorted information environment: AfD-affiliated media cover ECB decisions less promptly and frame them more negatively than conventional outlets. In addition, firms whose managers report lower trust in the ECB revise their expectations less and show a similarly muted credit demand response to policy surprises, pointing to institutional distrust as part of the underlying mechanism. A New Keynesian model extended to incorporate biased perceptions rationalizes these findings: distorted beliefs weaken policy transmission and exacerbate adverse shocks, posing significant challenges for central banks in increasingly polarized environments.