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Monetary Policy Transmission And Credit Cards: Evidence From Indonesia

Author

Listed:
  • K.P. Prabheesh

    (Indian Institute of Technology Hyderabad)

  • R. Eki Rahman

    (Bank Indonesia)

Abstract

This paper empirically tests the dynamics of credit cards and monetary policy in the context of Indonesia. Using monthly data from 2006 to 2018 and a structural vector autoregressive model, our findings indicate that credit card usage is mainly driven by Indonesia’s fast economic growth over the last decade, which indeed reflects the role of credit cards in consumption smoothing. The study also finds that monetary policy transmission through the lending channel is weak, with a more prevalent role for exchange rates and global oil prices in the transmission process.

Suggested Citation

  • K.P. Prabheesh & R. Eki Rahman, 2019. "Monetary Policy Transmission And Credit Cards: Evidence From Indonesia," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 22(2), pages 137-162, July.
    • Handle: RePEc:idn:journl:v:22:y:2019:i:2a:p:137-162
    DOI: https://doi.org/10.21098/bemp.v22i2.1039
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    More about this item

    Keywords

    Monetary policy; Structural vector autoregression; Credit cards;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General

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