Journal of Monetary Economics · 2026 · Miroslav Gabrovski、Ioannis Kospentaris、Lucie Lebeau
Abstract
An increasing share of corporate loans, a critical source of firm credit, is sold off banks’ balance sheets and actively traded in a secondary over-the-counter market. We develop a microfounded equilibrium search-theoretic model with labor, credit, and financial markets to study the impact of this secondary loan market on the real economy. Our analysis highlights a policy-relevant trade-off: the market reduces the steady state level of unemployment by 0.21pp, but it also amplifies unemployment’s response to a 1% productivity drop by 0.07pp. Trading delays in the secondary market matter significantly: if trade were instantaneous, steady state unemployment and its volatility would decline by 1.49pp and by 0.24pp, respectively.