An autonomous research institute under the Ministry of Finance


Financial structure, institutional quality and monetary policy transmission: A Meta-Analysis

Publication date

Jul, 2019


NIPFP Working Paper No. 274


Rudrani Bhattacharya , Shruti Tripathi and Sahana Roy Chowdhury


The long-standing empirical literature of monetary policy transmission acknowledges weak transmission of monetary policy shock to real activities and inflation in emerging economies. Fragile financial system, low level of financial integration and weak institutions are often cited as the reasons for lack of monetary policy transmission in these economy. This paper investigates to what extent these factors explain the variation in the extent of monetary policy transmission in a comprehensive set of developed and developing economies using meta-analysis framework. We find that the degree of financial development captured by various financial indicators explain cross-country variations in the magnitude and time lag of monetary policy transmission. We also find the role of financial accelerator in transmission magnitude to output growth.
Keywords: Financial development, Institutions, Monetary Policy Transmission, Meta Analysis
JEL Classification Codes:  C51, E52, E58
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