The Balance Sheet Channel of Monetary Policy Transmission: Evidence from the United Kingdom

Economica ◽  
2009 ◽  
Vol 76 (304) ◽  
pp. 675-703 ◽  
Author(s):  
ELENI ANGELOPOULOU ◽  
HEATHER D. GIBSON
Keyword(s):  
Monetary Policy ◽  
United Kingdom ◽  
Balance Sheet ◽  
Monetary Policy Transmission ◽  
The United Kingdom ◽  
Balance Sheet Channel ◽  
Policy Transmission

scholarly journals Corporate leverage and monetary policy transmission mechanism in India: A dynamic approach.

2021 ◽  
Vol 17 (2) ◽  
pp. 189-215
Author(s):  
Aishwarya Nagpal ◽  
Megha Jain
Keyword(s):  
Monetary Policy ◽  
Financial Stability ◽  
Balance Sheet ◽  
Policy Implications ◽  
Corporate Debt ◽  
Monetary Policy Transmission ◽  
Macroeconomic Policies ◽  
Macroeconomic Conditions ◽  
Policy Transmission ◽  
The Impact

The macroeconomic policies of a nation have a major bearing on the financial performance of the companies and their potential sustainability and growth. This study investigates the impact of monetary policy on the corporate leverage adjustment through microscopic monetary policy transmission channels, mainly the interest rate and credit channels, using a sample of 422 manufacturing firms in India from 2011 to 2017 by employing partial adjustment model. The findings suggest that contractionary monetary policy cuts down overall corporate debt. The study further asserts that corporate debt in Indian firms demonstrates target behaviour and the speed at which firms adjust their actual debt ratios towards target debt ratios is a function of not only firm-specific characteristics but also macroeconomic conditions prevailing in the country, proxied by monetary policy indicators in our study. The study has critical policy implications as the balance sheet situation of corporates is a crucial factor in the financial stability of the economy.

scholarly journals Inside the Black Box: The Credit Channel of Monetary Policy Transmission

1995 ◽  
Vol 9 (4) ◽  
pp. 27-48 ◽  
Author(s):  
Ben S Bernanke ◽  
Mark Gertler
Keyword(s):  
Monetary Policy ◽  
Balance Sheet ◽  
Bank Lending ◽  
Credit Channel ◽  
Real Economy ◽  
Monetary Policy Transmission ◽  
Informational Frictions ◽  
Policy Transmission ◽  
Policy Shocks ◽  
The Difference

The ‘credit channel’ theory of monetary policy transmission holds that informational frictions in credit markets worsen during tight-money periods. The resulting increase in the external finance premium--the difference in cost between internal and external funds--enhances the effects of monetary policy on the real economy. The authors document the responses of GDP and its components to monetary policy shocks and describe how the credit channel helps explain the facts. They discuss two main components of this mechanism, the balance sheet and bank lending channels. The authors argue that forecasting exercises using credit aggregates are not valid tests of this theory.

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