The bank credit channel in Peru: evidence and transmission mechanism

This paper examines the bank credit channel as part of the monetary policy transmission process to macroeconomic activity in Peru. Specifically, it identifies the bank credit channel using bank-level data and assesses its importance in the transmission process to economic activity using a structural autoregressive vector model. The analysis considers a sample period in which a single variable—the short-term interest rate—can capture the Central Bank’s monetary policy stance. The results indicate that the bank credit channel has been operating; however, this channel is not significant in explaining the transmission of monetary policy to macroeconomic activity. (Audio: Department of Economic Publications)