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Bank credit in the transmission of monetary policy: A critical review of the issues and evidence

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  • Smant, David / D.J.C.

Abstract

The "credit view" emphasizes the impact of monetary policy on the amount and conditions of credit supplied by the banking sector as a main transmission channel. A review of the literature shows that the view that banks are in some sense special is widely accepted. However, whether the bank credit channel is an important part of the aggregate monetary transmission remains questionable. There is no evidence for credit rationing, at least not at the macroeconomic level. Many of the empirical results on the credit channel have alternative interpretations. Much of the debate on a bank credit channel appears to deal with effects of second-order importance.

Suggested Citation

  • Smant, David / D.J.C., 2002. "Bank credit in the transmission of monetary policy: A critical review of the issues and evidence," MPRA Paper 19816, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:19816
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    Cited by:

    1. Kudlyak, Marianna & Sanchez, Juan M., 2016. "Revisiting Gertler-Gilchrist Evidence on the Behavior of Small and Large Firms," Working Papers 2016-5, Federal Reserve Bank of St. Louis.
    2. Kudlyak, Marianna & Sánchez, Juan M., 2017. "Revisiting the behavior of small and large firms during the 2008 financial crisis," Journal of Economic Dynamics and Control, Elsevier, vol. 77(C), pages 48-69.
    3. Qin, Duo & Xu, Zhong & Zhang, Xuechun, 2014. "How much informal credit lending responded to monetary policy in China? The case of Wenzhou," Journal of Asian Economics, Elsevier, vol. 31, pages 22-31.
    4. Bojan Markovic, 2006. "Bank capital channels in the monetary transmission mechanism," Bank of England working papers 313, Bank of England.
    5. Mna, Ali & Younsi, Moheddine, 2017. "The Credit Channel Transmission of Monetary Policy in Tunisia," MPRA Paper 83519, University Library of Munich, Germany.
    6. van Holle, Frederiek, 2017. "Essays in empirical finance and monetary policy," Other publications TiSEM 30d11a4b-7bc9-4c81-ad24-5, Tilburg University, School of Economics and Management.

    More about this item

    Keywords

    bank credit channel; monetary policy;

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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