The multi-regime bank lending channel and the effectiveness of the Polish monetary policy transmission during transition

In this paper, we examine the consequences of interactions between the bank lending channel and the traditional interest rate and exchange rate channels on the effectiveness of monetary policy transmission in Poland since 1994. Using a dynamic small open-economy model, we show that the bank lending channel may either amplify or attenuate the impact of monetary policy shocks. The direction of change in the spread between a loan rate and a policy rate is a useful indicator of different regimes. Empirically, we find evidence of an attenuation regime from 1996 to 1998 and of a neutral effect of the bank lending channel, on average, after that time. Journal of Comparative Economics33 (1) (2005) 1-24.