Business, Management and Accounting
4 years ago

New monetary policy in Indonesia leads to rigid lending rates.

Deleted Journal
ASYMMETRIC TRANSMISSION OF MONETARY POLICY TO INTEREST RATES: EMPIRICAL EVIDENCE FROM INDONESIA
Fitri Ami Handayani, Febrio Kacaribu

Paper Summary

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The study looked at how changes in Indonesia's monetary policy affected interest rates. They focused on the impact of a policy rate shift in August 2016. By analyzing data from 2011 to 2019, they found that the new policy rate regime improved money market rates but made bank retail rates more rigid. Lending rates became more resistant to going down when monetary policy eased, but more responsive when it tightened.