Proceedings of the 1st International Conference on Social Science, Humanities, Education and Society Development, ICONS 2020, 30 November, Tegal, Indonesia

Research Article

Bank Lending Channel of Monetary Policy Transmission: New Evidence From Indonesia

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  • @INPROCEEDINGS{10.4108/eai.30-11-2020.2303764,
        author={Ahmad Albar Tanjung},
        title={Bank Lending Channel of Monetary Policy Transmission: New Evidence From Indonesia},
        proceedings={Proceedings of the 1st International Conference on Social Science, Humanities, Education and Society Development, ICONS 2020, 30 November, Tegal, Indonesia},
        publisher={EAI},
        proceedings_a={ICONS},
        year={2021},
        month={1},
        keywords={monetary policy bank lending output vecm},
        doi={10.4108/eai.30-11-2020.2303764}
    }
    
  • Ahmad Albar Tanjung
    Year: 2021
    Bank Lending Channel of Monetary Policy Transmission: New Evidence From Indonesia
    ICONS
    EAI
    DOI: 10.4108/eai.30-11-2020.2303764
Ahmad Albar Tanjung1,*
  • 1: Management, SekolahTinggi Ilmu Manajemen Sukma, Medan, Indonesia
*Contact email: alb4rt4njung@gmail.com

Abstract

Monetary policy can affect the economy through a variety of channels. Using quarterly secondary data from 2010: 1 to 2020: 2. This paper examines the bank lending channel to provide new evidence and explain the transmission mechanism in Indonesia. The estimation method used is a Vector Error Correction Model (VECM). The result of the VECM analysis shows that the Monetary Policy transmission mechanism through the bank lending channel still has a weak influence on the output. Therefore, from the demand side, it is necessary to seek new market shares for export purposes, also, to maintain existing ones to restore domestic corporate credit demand, and from the supply side, banks must provide easy access for MSMEs to obtain loans while still prioritizing the principle of prudence.