Economics at your fingertips  

Effects of monetary policy and credibility on financial intermediation: evidence from the Brazilian banking sector

Gabriel Caldas Montes (), José Américo Pereira Antunes () and Alexei Ferreira Araújo ()
Additional contact information
Gabriel Caldas Montes: Fluminense Federal University
José Américo Pereira Antunes: Central Bank of Brazil
Alexei Ferreira Araújo: Fluminense Federal University

Empirical Economics, 2021, vol. 60, issue 3, No 5, 1219 pages

Abstract: Abstract Since, under inflation targeting (IT), the main monetary policy instrument to control inflation is the basic interest rate, an important question that arises is: How do changes in this instrument affect financial intermediation? On the other hand, under IT, one of the main goals of the central bank is to make monetary policy credible. In this sense, how can credibility affect the relation between monetary policy and financial intermediation? Are the transmission mechanism and the effects of credibility the same for state-owned banks and privately owned banks? Using data from the Brazilian banking sector, this paper analyzes the effects of monetary policy on financial intermediation and investigates the existence of the “Paradox of Credibility.” The findings suggest the monetary policy interest rate affects financial intermediation. Moreover, the results show that credibility is able to cushion the effect of monetary policy on financial intermediation. And finally, the results reveal how the different effects analyzed in the paper, and especially the mitigating effect of credibility, differ between privately owned and state-owned banks.

Keywords: Monetary policy; Credibility; Financial intermediation; Banks (search for similar items in EconPapers)
JEL-codes: E44 E51 E52 E58 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.springer. ... rics/journal/181/PS2

DOI: 10.1007/s00181-019-01790-6

Access Statistics for this article

Empirical Economics is currently edited by Robert M. Kunst, Arthur H.O. van Soest, Bertrand Candelon, Subal C. Kumbhakar and Joakim Westerlund

More articles in Empirical Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

Page updated 2021-03-13
Handle: RePEc:spr:empeco:v:60:y:2021:i:3:d:10.1007_s00181-019-01790-6