The Banking Credit Channel as a Mechanism for Transmitting the Impact of Mon-etary Policy to the Libyan Economy

Abstract

This study focuses on existence a credit channel according to the Conditions and assumptions of Credit Theory, and if the Libyan monetary policy depends on it and uses it to effecting on the economic activity during the period from 1970 to 2005. The study has tackled, specifically, the current prolonged period, which has included great changes at the Libyan economy, and its being catch up with the current trend of modern researches and studies which test the transfer of monetary policy influence through other variables rather than the channel of rate prices, especially the channel of bank credit, in addition to the frequent repetition of the process of testing the results through making sure on the indexes of analytical side by models of measure which the study has applied the most common, acceptable and spreading of them in the modern economic studies , and design a model of form VAR (Vector Autoregressive).  The main result of this study was to confirm the existence of bank credit channel in Libya through which monetary policy impact on economic activity during the study period.