Banking channel crucial in India's monetary policy impact on economy
The study looked at how monetary policy in India affects prices and economic activity, focusing on the role of banks in this process. By analyzing data, the researchers found that monetary policy influences inflation and real activity. The impact on prices takes longer to show up than the impact on economic activity. Monetary policy changes affect interest rates and bank investments, with a delay in the effect on bank credit. Bank investments play a crucial role in how monetary policy affects the economy in India.