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Is the Lending Channel of Monetary Policy Dominant in Australia?

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  • Tomoya Suzuki

Abstract

The transmission process of monetary policy is a longstanding macroeconomic issue. The lending view is that a monetary tightening affects aggregate demand by shifting the supply schedule of bank loans left. The contraction of bank loans does not necessarily mean a shift of the supply schedule. Therefore, testing the lending view requires the identification of the shifts of the demand and supply schedules in the bank loan market. This paper employs an original approach, finding that the lending channel is not dominant in Australia. The paper also examines features of Australian banks' behaviour which make the lending channel less dominant. Copyright © 2004 Economic Society of Australia..

Suggested Citation

  • Tomoya Suzuki, 2004. "Is the Lending Channel of Monetary Policy Dominant in Australia?," The Economic Record, The Economic Society of Australia, vol. 80(249), pages 145-156, June.
  • Handle: RePEc:bla:ecorec:v:80:y:2004:i:249:p:145-156
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    References listed on IDEAS

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    Cited by:

    1. Jarkko Jääskelä, 2007. "More Potent Monetary Policy? Insights from a Threshold Model," RBA Research Discussion Papers rdp2007-07, Reserve Bank of Australia.
    2. David Jacobs & Vanessa Rayner, 2012. "The Role of Credit Supply in the Australian Economy," RBA Research Discussion Papers rdp2012-02, Reserve Bank of Australia.
    3. Abdul Majid, Muhamed Zulkhibri, 2010. "Bank-characteristics, lending channel and monetary policy in Malaysia: evidence from bank-level data," MPRA Paper 30052, University Library of Munich, Germany.
    4. David L. Reifschneider & Peter Tulip, 2017. "Gauging the Uncertainty of the Economic Outlook Using Historical Forecasting Errors : The Federal Reserve's Approach," Finance and Economics Discussion Series 2017-020, Board of Governors of the Federal Reserve System (U.S.).
    5. Birgül Cambazoğlu & Hacer Simay Karaalp, 2013. "The External Finance Premium and the Financial Accelerator: The Case of Turkey," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Eastern Macedonia and Thrace Institute of Technology (EMATTECH), Kavala, Greece, vol. 6(1), pages 103-121, April.
    6. Yu Hsing, 2013. "Test of the Bank Lending Channel: The Case of Australia," Economics Bulletin, AccessEcon, pages 2575-2582.
    7. Liu, Luke, 2011. "Monetary policy, bank size and bank lending: Evidence from Australia," MPRA Paper 35033, University Library of Munich, Germany.
    8. Leon Berkelmans, 2005. "Credit and Monetary Policy: An Australian SVAR," RBA Research Discussion Papers rdp2005-06, Reserve Bank of Australia.
    9. Nimark, Kristoffer, 2008. "Dynamic pricing and imperfect common knowledge," Journal of Monetary Economics, Elsevier, pages 365-382.
    10. liu, luke, 2012. "Monetary policy, bank size and bank lending: evidence from Australia(new version)," MPRA Paper 37489, University Library of Munich, Germany.

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