Title: The credit channel of the transmission mechanism in the Republic of Croatia

Authors: Marijana Ivanov, Vladimir Cavrak

Addresses: Graduate School of Economics and Business, University of Zagreb, J.F. Kennedy Sq. 6, Zagreb 10000, Croatia. ' Graduate School of Economics and Business, University of Zagreb, J.F. Kennedy Sq. 6, Zagreb 10000, Croatia

Abstract: The influence of monetary trends on real movements is manifested through several channels of transmission mechanism. This paper analyses the functioning of the credit channel and the distribution of commercial banks loans to different sectors in the Republic of Croatia. The analysis shows quite clearly how much more banks prefer to grant credits to households than they do to business sector. Implications of these monetary-credit flows on economic activity in the Republic of Croatia can be observed on the strong growth of personal consumption component of the GDP as well as on growth of imports of goods and services.

Keywords: transmission mechanism; credit channel; national economy; Croatia; commercial banks; bank loans; credit flow; economic activity; personal consumption; imports; monetary policy.

DOI: 10.1504/IJESB.2005.006968

International Journal of Entrepreneurship and Small Business, 2005 Vol.2 No.3, pp.254 - 265

Published online: 29 Apr 2005 *

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