This paper quantifies the relative importance of credit demand and credit supply shocks in determining fluctuations in credit variables and the business cycle. We extend Bayesian structural VARs with informative priors on structural coefficients to allow for the case of multiple external instruments. As a new instrument for credit demand, we construct a granular instrument based on regional mortgage origination. We find that credit demand is quite elastic with respect to contemporaneous macroeconomic conditions, while credit supply is relatively inelastic. Both shocks together account for around 50% of the variation of output, inflation and risk-free interest rates. However, their relative importance varies over time. Credit demand mostly drove the boom prior to financial crisis, while credit supply shocks were responsible during the crisis itself.