Monetary Transmission and Bank Lending in Portugal: A Sectoral Approach

José Alberto Fuinhas ()

Working Papers de Gestão, Economia e Marketing (Management, Economics and Marketing Working Papers) from Universidade da Beira Interior, Departamento de Gestão e Economia (Portugal)

Abstract: This paper investigates the role of bank lending in the monetary transmission process in Portugal. We estimate a small sectoral VAR model of the Portuguese macroeconomy. This model is then used to simulate the effects of an exogenous monetary policy shock upon asset prices, bank balance sheet variables and final target variables (activity and prices), for the personal and corporate sectors. Significant sectoral differences are found among the channels of monetary transmission. In addition, the use of sectoral data facilitates the identification of distinct money and credit channels in the transmission of monetary policy. These results contrast with the ambiguous findings on the roles of money and credit in the literature to date. Our study suggests that there is a bank-lending channel in Portugal.

Keywords: Credit channel; bank lending; and monetary transmission (search for similar items in EconPapers)
JEL-codes: C32 E44 E51 E52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-cba, nep-fmk, nep-mac and nep-mon
Date: 2006

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