Abstract
Credit markets are not always balanced because of unbalanced information and other causes. There are two credit channels that influence the transmission of monetary policy from finance to the real sector, namely bank credit channels that are more concerned with the behavior of banks that are more selective in credit selection because of asymmetric information.This study aims to determine the effect of credit that consists of investment credit, working capital credit and consumption credit to the inflation rate through Gross Domestic Product (GDP) in Indonesia. The overall data used in this study is secondary data from the result of systematic recording in the form of time series from 2007 to 2016 obtained from the Central Bureau of Statistics, Bank Indonesia Report and Indonesian Banking Statistics. Data were analyzed by using multiple regression with Ordinary Least Square (OLS) approach. Based on the results of the research, simultaneous credit has a positive and significant effect on inflation through GDP and partially found that investment credit and working capital credit have positive and significant effect to inflation through GDP, while consumption credit has positive and insignificant effect.
Highlights
IntroductionThe central bank of the Republic of Indonesia issued a policy to control the inflation rate of the monetary sector, namely the transmission of monetary policy
Inflation is an always interesting economic phenomenon discussed mainly related to its broad impact on the economy especially in Indonesia
The data used in the study are secondary data, namely data relating to investment credit data, working capital credit data, consumption credit data, Gross Domestic Product (GDP) data and inflation rate data for the period 2007 - 2016
Summary
The central bank of the Republic of Indonesia issued a policy to control the inflation rate of the monetary sector, namely the transmission of monetary policy. The transmission mechanism of monetary policy basically illustrates how monetary policy pursued by the central bank influences various economic and financial activities so that in the end it can achieve its stated objectives. The transmission mechanism of monetary policy is a complex process, and in monetary economic theory it is often called "black box" (Miskhin, 1995). The effectiveness of monetary policy is very dependent on the transmission mechanism. There are several lines in the transmission mechanism of monetary policy, one of which is the credit line
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: EcceS (Economics, Social, and Development Studies)
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
