Monetary-Macroprudential Policy Synergy Through the Bank Lending Channel in Indonesia

Fitri Handayani and Sekar Utami Setiastuti

Emerging Markets Finance and Trade, 2025, vol. 61, issue 4, 1113-1129

Abstract: This study examines the efficiency of monetary policy transmission via bank lending channels in Indonesia, specifically emphasizing its interaction with macroprudential policy. We utilize panel data encompassing individual-level information from banks in Indonesia from 2005 to 2019. The results of our analysis provide empirical support for the bank lending channel efficiency in the context of the monetary and macroprudential policy framework. The findings underscore the importance of macroprudential interactions in moderating the effect of monetary policy. Furthermore, our research uncovers asymmetrical consequences stemming from the implementation of monetary contraction/expansion policies, as well as the effects resulting from variances in the characteristics of banks. Our study enhances the understanding of the intricate relationship between monetary policy, macroprudential measures, and the bank lending channel in Indonesia.

Date: 2025
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DOI: 10.1080/1540496X.2024.2404171

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