Mechanism of monetary transmission through the credit channel - a case study of the Algerian economy for the period 2000-2020

This study aimed to evaluate the effectiveness of the credit channel in transferring the impact of monetary policy to the rate of inflation in Algeria during the period (2000-2020) using the following variables: money supply M2 as an indicator of monetary policy, inflation rate (CPI) as a final goal of monetary policy, Loans to the public sector (CBS) and loans to the private sector as indicators of credit channel, This is based on two models, a basic model that measures the effect of the change in the money supply M2 to the inflation in the absence of any channel and the credit channel model,using the Cointegration test and the VAR model and the analysis of the response functions and the components of variance. The results of the study concluded that there is no co-integration relationship between the variables of the basic model and the variables of the credit channel model, and the existence of the credit channel as a mechanism for monetary transition to the inflation during the study period through loans provided to the private sector ; This requires directing it towards productive investments.