Monetary Transmission Trough Credit Channeling In Indonesia

Lenggogeni, Athina (2011) Monetary Transmission Trough Credit Channeling In Indonesia. S1 thesis, Universitas Andalas.

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Abstract

The credit channeling theory of monetary policy transmission which Is explained by Bemanke (1995) and Mlshkin (2001) showed that there was problem of weak cost-of-capital in estimating investment spending, it means that interest rate of credit is not the only one factor which influence the investor in borrowing. There are two components of credit channel mechanism, bank lending channel and balance sheet channel. This study would like to observe factors which determine the supply and demand for investment loan by adopting model from Oliver Hulsewig (2003), and also to find out whether the monetary transmission policy through credit channel can be reported. The empirical result addresses only equity Is the significant variable in loan supply equation. In loan demand both interest rate and GDP are significant. Further, impulse response analysis shows that shock in monetary system reduce oan supply and loan demand. Briefly, there is evidence of effectiveness of monetary policy transmission thruogh credit channel in that sample period.

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