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The Bank Lending Channel in Peru: evidence and transmission mechanism

Cesar Carrera ()

No 2010-021, Working Papers from Banco Central de Reserva del Perú

Abstract: In the past ten years the Peruvian economy has experienced important structural changes regarding monetary policy. This document focuses on the bank lending channel as part of the transmission process to macroeconomic activity in the Peruvian economy based on Bernanke, Gertler, and Gilchrist (1996) flight-to-quality argument. The purpose of this work is to identify the bank lending channel (using bank level data), and test its relevance for understanding the transmission to economic activity by comparing monetary policy effects under two scenarios; with and without a bank lending channel (using structural autoregressive vectors). As in Gambacorta (2005), I consider a sample period in which a policy variable can capture the monetary policy stance of the central bank. For the case of Peru, I conclude that the bank lending channel has operated but this channel is not important for identifying the transmission process from monetary policy to macroeconomic activity.

Keywords: Monetary policy transmission; Bank lending channel; flight-to-quality; panel of banks (search for similar items in EconPapers)
JEL-codes: C22 C23 E44 E51 E52 E58 (search for similar items in EconPapers)
Date: 2010-12
New Economics Papers: this item is included in nep-ban, nep-cba and nep-mon
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