Research Article
Transmission of Monetary Policy to Bank Lending Rate in Indonesia
@INPROCEEDINGS{10.4108/eai.18-12-2023.2349310, author={Farrah Noor Fitria Agus and Buddi Wibowo}, title={Transmission of Monetary Policy to Bank Lending Rate in Indonesia}, proceedings={Proceedings of the 1st UHAMKA International Conference on Economics and Business, UHICEB 2023, 18-19 December 2023, Jakarta, Indonesia}, publisher={EAI}, proceedings_a={UHICEB}, year={2024}, month={11}, keywords={policy rate lending rate incomplete pass-through adjustment}, doi={10.4108/eai.18-12-2023.2349310} }- Farrah Noor Fitria Agus
Buddi Wibowo
Year: 2024
Transmission of Monetary Policy to Bank Lending Rate in Indonesia
UHICEB
EAI
DOI: 10.4108/eai.18-12-2023.2349310
Abstract
This study aims to find out how quickly Indonesian lending rates react to shifts in policy interest rates. The level of transmission is estimated using VECM, while the time-varying speed of adjustment is estimated using MAL. The findings show the same incomplete pass-through for working capital loans and investment rates in long-term and short-term. Working capital and investment rates takes quite a slow time in responding to policy interest rates change. This study tests empirically the existence of asymmetrical behavior of lending interest rate adjustment in Indonesia. These findings are important for policymakers to know how long the credit rate response to monetary policy is.
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