Interest rate and credit channel for households and firms: Evidence from a large emerging economy

Helder Ferreira de Mendonça () and Vitor Britto ()
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Helder Ferreira de Mendonça: Fluminense Federal University and National Council for Scientific and Technological Development
Vitor Britto: Fluminense Federal University
Authors registered in the RePEc Author Service: Helder Ferreira de Mendonça ()

Economics Bulletin, 2017, vol. 37, issue 1, 586-604

Abstract: This study analyzes the effect of the monetary policy interest rate on the credit channel taking into account disaggregated information for households and firms under inflation targeting. Based on aggregate data of the Brazilian economy for the period 2001-2015, this article addresses empirical evidence regarding the impact of the interest rate on credit granted and the credit spread. The results indicate that there is a negative effect of the interest rate on credit granted to firms and that, in the case of credit spread, there is a positive impact on both households and firms. The magnitude of the effect of the interest rate on credit granted to firms is greater than that observed for households. In contrast, the magnitude of the effect of the interest rate on the credit spread is lower for firms when compared to households.

Keywords: interest rate; credit channel; households; legal entities; inflation targeting. (search for similar items in EconPapers)
JEL-codes: E5 (search for similar items in EconPapers)
Date: 2017-03-29
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Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-16-00555

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