The Credit Channel and the Subprime Mortgage Crisis

“With this book on the credit channel and the subprime mortgage crisis, Cristina Peicuti makes an important contribution to a better understanding, not only of the credit channel but also of the great financial crisis of 2007–2008.”— Jean-Claude Trichet , President of the European Central Bank (2004–2011)

“An interesting retrospective on the subprime mortgage crisis, along with the implications for economic analysis. Useful for policy makers and academics alike.”— Mark Gertler , Henry and Lucy Moses Professor of Economics at New York University

This book explores the evolving role of the credit channel in contemporary macroeconomic policy and financial stability. Cristina Peicuti examines the dual function of the credit channel—as both a conduit for monetary policy transmission and a macroeconomic stabilizer—within the broader context of capitalist economies.

Grounded in both theoretical inquiry and empirical investigation, the volume establishes the conceptual foundations of the credit channel. Peicuti systematically demonstrates the channel’s critical role in amplifying or mitigating the effects of monetary interventions, thereby shaping macroeconomic outcomes. The book provides an empirical analysis of the credit channel’s performance during the subprime mortgage crisis. Pairing case studies with policy evaluations, Peicuti assesses the measures adopted by the US and the EU Member States to preserve credit flows and support economic recovery. This analysis not only underscores the operational significance of the credit channel during periods of financial distress but also highlights its potential as a strategic policy instrument. The concluding chapters advocate for a structural rethinking of capitalism’s financial architecture, emphasizing the need for central banks to integrate the credit channel more explicitly into their policy frameworks. 

The resulting book contextualizes modern economic governance and highlights the transformative potential of the credit channel. 

Cristina Peicuti  is a professor in economics and the scientific director of a research chair at the ESCP Business School in Paris, France. She is the author of ten books, including  A Monetary and Economic History of France Since 1944  (2026) and  The European Economy in 100 Quotes  (2024).