Test of the Bank Lending Channel: The Case of Poland

Abstract

This paper tests the bank lending channel for Poland based on a simultaneousequation model consisting of demand for and supply of bank loans. The three-stage
least squares method is employed in empirical work. This paper finds support for a bank lending channel for Poland. Expansionary monetary policy through a lower money market rate or open market purchase of government bonds to increase bank reserves/deposits would increase bank loan supply.