More on the credit channel of monetary policy transmission: an international comparison

Félix López-Iturriaga ()

Applied Financial Economics, 2000, vol. 10, issue 4, 423-434

Abstract: Evidence is provided of the credit channel as a possible way of transmitting monetary policy decisions. This is done in an international framework by comparing the reaction of non-financial companies of twelve OECD countries to changes in monetary policy. Using the interest rate as an indicator of the stance of monetary policy, it is found that the interest rate does affect firms' investment and output by altering their bank finance availability, particularly short-term finance. Results also seem to show rather different effectiveness of the monetary policy depending on the features of the financial system of each country. In those countries with a more marketoriented financial system, corporate finance relies less heavily on banks, so they are not so influenced by shifts in monetary policy as are companies of other more bank-based countries.

Date: 2000
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DOI: 10.1080/09603100050031552

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