An empirical investigation of the balance sheet channel of monetary policy transmission in South Africa

Abstract

The intention of this study is to outline an empirical framework of the balance sheet channel of monetary policy transmission in South Africa. Specifically, this study examines how monetary policy decisions are transmitted, through the balance sheet of business firms, to the real economy. The study is motivated by the fact that credit has now occupied an important role in the funding of new capital investment in South Africa. Thus, the balance sheet channel may become a relevant channel in the monetary policy transmission process.