engleski

Interest rates on the money market as a determinant of banks’ credit activity

Although the monetary policy is very effective through interest rate channel, the efficiency of mentioned was absent in Croatia. The money market interest rates affect the banking credit activity, but in the case of Croatia money market did not support the economic stronghold. The aim of this paper is to analyse impact of money market interest rates on banks’ lending activity and interest rates channel on loans in the Republic of Croatia. Regression analysis of the impact of interest rate on the money market on banks' credit activity and the interest rates on loans was performed. The results of the analysis indicate that interest rate trends at the money market affect average interest rates on loans in the Republic of Croatia, but do not affect banks credit activity. Pearson correlation coefficient confirmed the results of the regression analysis. The findings are useful for further policy makers in order to design monetary policy tools.

banks, interest rates, loans

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