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Jui-Chuan Della Chang
''Identifying the bank lending channel in a small open economy''
( 2013, Vol. 33 No.2 )
This paper attempts to provide an alternative method of identifying the bank lending channel in a small open economy at the aggregate level, with emphasis on the degree of the asset substitutability. By testing the long-run relationships underlying a general equilibrium model, our results show that, in the Canadian economy, the bank lending channel plays a role during the financial regulatory period (1970:Q3-1988:Q1) but becomes ineffective during the deregulated period (1988:Q2-2006:Q2). Our findings confirm the prediction of the theory that change in Canadian financial structure matters for change in its transmission of monetary policy.
Keywords: Bank lending channel, Monetary policy, Small open economy
JEL: E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General
E4 - Money and Interest Rates: General
Manuscript Received : May 14 2013 Manuscript Accepted : Jun 25 2013

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