Cover IMF Working Papers
Monetary Policy in India: Transmission to Bank Interest Rates
Author: Miss Sonali Das
Series:
IMF Working Papers
Volume/Issue:
Volume 2015: Issue 129
Language:
English
Publication Date:
23 Jun 2015
DOI:
https://doi.org/10.5089/9781513598796.001
ISBN:
9781513598796
ISSN:
1018-5941
Pages:
33
Keywords:
WP; lending rate; deposit rate; Monetary policy transmission; India; deposit rates; lending rates; reverse repo; bank interest; speed of adjustment; error correction term; policy rate cut; correction term; target rate; adjustment speed; prime lending rate; Central bank policy rate; Repo rates; Bank credit; Prime rates
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper provides new evidence on the credit channel of monetary policy transmission in India. Using stepwise estimation of vector error correction models, the analysis finds significant, albeit slow, pass-through of policy rate changes to bank interest rates in India. There is evidence of asymmetric adjustment to monetary policy: the lending rate adjusts more quickly to monetary tightening than to loosening. In addition, the speed of adjustment of deposit and lending rates to changes in the policy rate has increased in recent years.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund