An important question in macroeconomics has been how the transmission mechanism of monetary policy works. In particular, the question of whether there exists a credit or bank lending channel for the transmission of monetary policy has been one of the central themes in the discussion of the effectiveness of monetary policy. If this channel exists, then shocks to credit markets, particularly to bank loans, can have real effects.
Exchange Rate Policy and the Bank Lending Channel: Sectoral Evidence From MexicoMartina Copelman and Alejandro Werner ,
Federal Reserve Board