MONETARY POLICY TRANSMISSION AND CREDIT CARDS: EVIDENCE FROM INDONESIA

  • KP Prabheesh Indian institute of technology Hyderabad
  • R Eki Rahman
Keywords: Monetary policy;, Structural vector autoregression;, Credit cards

Abstract

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

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Published
2019-07-31
Section
Articles