Asymmetric effectiveness of the bank lending channel over financial accelerator: An analysis for emerging market economies

The monetary transmission mechanism refers to the transmission process of the monetary policy strategy to the real economy and inflation rate. Monetary policy decisions applied by monetary authorities can affect the economy through various channels. The monetary transmission mechanism can be explained by various channels. The bank lending channel is critical for emerging market economies to reach their full potential and to allocate resources efficiently. The purpose of this study is to look into the efficiency of bank lending channel in the context of financial accelerator in emerging market economies. In this context, by expanding with the financial accelerator variable, the efficiency of the bank lending channel is examined with the Threshold-VAR analysis for the E-7 country group (Brazil, Indonesia, India, Mexico, Russia and Turkey). Analysis period consists of monthly data between the years 2007:3-2020:5 for Brazil, 2010:1-2020:2 for Indonesia, 2011:11-2020:5 for India, 2004:1-2020:5 for Mexico, 2007:12-2020 for Russia, and 2006:1-2020:5 for Turkey. According to the findings of the study, Russia's bank lending channel is efficient in the high regime. It has been determined that there is a partial effect in the low regime for Mexico and Brazil, and in the high regime for Turkey. However, there was no evidence to support the efficiency of the bank lending channel in Indonesia and India.