مجلة الامتياز لبحــوث الاقتصاد والادارة
Volume 9, Numéro 2, Pages 286-305
2025-12-17
Assessing The Role Of The Credit Channel In Transmitting Monetary Policy Impacts To The Real Sector In Algeria
Authors : Lakahel Samiha . Rakhrour Youssef .
Abstract
This study examines the role of monetary policy instruments in Algeria, with a focus on the credit channel as a transmission mechanism to the real economy. The primary objective is to examine how monetary policy shocks impact key macroeconomic variables, namely industrial production, inflation, and short-term credit, within a developing financial environment. The research hypothesizes that the credit channel constitutes the dominant pathway through which monetary impulses affect real activity. Using a Vector Autoregressive (VAR) model, the study analyses dynamic interactions among the money market rate (MMR), real exchange rate (RER), short-term credit (LSTC), consumer prices (LPCI), and industrial production (LIPI). The findings reveal that monetary policy shocks have a significant impact on real activity through the credit channel. At the same time, the exchange rate plays a secondary role, and consumer prices respond weakly due to structural rigidities. The results highlight the importance of strengthening financial intermediation to enhance the transmission efficiency of monetary policy. Policy recommendations include improving credit allocation toward productive sectors and reinforcing institutional frameworks to foster sustainable economic growth.
Keywords
Monetary policy ; Credit channel ; Transmission mechanism ; Financial intermediation ; Real economy
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