The Credit Channel of Monetary Policy Transmission in the Iranian Economy

In recent years, some phenomena which had been taken place in the world show that financial markets, specially banking sector performance, had a vital role on these economies and their business cycles. With regard to that point, using some banking sector variables and indices, this paper investigates the existence of the credit channel transmission of monetary policy during 2001-2009. To estimate this purpose, we applied GMM method and other specification tests. Our results show that in Iran’s Banking system, there is some evidence of the existence of a credit channel, but there is no strong evidence about the presence of transmission of monetary policy through interest rate.