Our results reveal that industries with assets that are more difficult to collateralise (ie, industries with lower asset tangibility, lower investment intensity, greater labour intensity, and higher depreciation) experience a more substantial decline in output in response to an unanticipated monetary contraction, followed by industries that produce durable goods. The latter finding lends support to the interest rate channel (predicting that consumption of durables falls after a monetary tightening), while the former finding highlights the crucial role of financial frictions and the associated credit channel. In ... (full story)