Document Type : Original Article


1 Ph.D. Student at Department of Economics, Semnan University

2 Professor at Department of Economics, Bu Ali Sina University, Hamedan, Iran

3 Associate Professor at Department of Economics, Semnan University

4 Professor at Department of Economics, Semnan University


The purpose of this study is to investigate the effect of CAMEL financial health indicators on country،s banks lending within the bank lending channel. In order to analyze the Heterogeneity of banks' behavior in response to monetary policy, the variables called the interaction effect of the CAMEL indicators whit monetary policy have been defined in the model that are obtained by multiplying the monetary policy in each of these Ratios. In model estimation using GMM method uses the balance sheet and profit and loss statement panel data of the 24 banks in the period 1384-1396. results indicate that the monetary policy variable -monetary base- has a positive and significant relationship with bank lending and the CAMEL ratios change the intensity of monetary policy effectiveness on banks lending. In other words CAMEL indicators are a factor for banks to behave differently in response to monetary policy, which is the heterogeneous concept of banks' behavior. the impact of monetary policy on bank lending will deacrease with higher levels of liquidity and management quality indicators. But capital adequacy and asset quality strengthen the effectiveness of monetary policy on bank lending and earning indicator doesn’t have any effect. Also the degree of competition in the banking industry strengthens the effectiveness of monetary policy on bank lending.


  • - Taghavi, Mehdi & Lotfi, Ali Asghar (2006). “Investigating the Effects of Monetary Policy on Volume of Deposits, Given Facilities and Liquidity of Iran Banking System”, Journal of Economic Research, Vol. 6, Issue. 20, pp. 131-165.

    - Khoshnoud, Zahra & Esfandiari, Marzieh (2014). “Bank Lending and Capital Adequacy: A Comparison between Public and Private Banks in Iran ”, Journal of Monetary and Banking, Vol. 6, Issue. 20, pp. 211-235.

    - Shahchera, Mahshid & Mir Hashemi Naeini, Simin (2011). “Analysis of Effects of Monetary Policy shocks on Banking Network Facilities in Iran”, Faslnameh Tahghighat Eghtesadi rah Andisheh, Vol. 1, Issue. 4, pp. 91-118.

    - Shahchera, Mahshid & Keshishian, Lian (2014). “Simultanous Effects of Bank Concentration and Monetary Policy on Bank Lending Channel in Iranian Banking System”, Journal of Monetary and Banking, Vol. 7, Issue. 19, pp. 27-50.

    - Fatahi, Shahram; Rezaei, Mehdi, & Jahed, Tahereh (2017). “The Effect of Banking Soundness on Profitability of Commercial Banks: Threshold Panel Regression Approach”, Journal of Financial Management Strategy, Vol. 5, No. 16, pp. 29-50.

    - Moradi, Mehdi; Khodadad Kashi, Farhad; Biabani, Jahangir & Ghafari, Hadi (2017). “The Effect of Market Power in the Banking System on the Lending Channel: Evidence From Iran”, Journal of Monetary and Banking, Vol. 10, Issue. 33, pp. 429-456.

    - Daliri, Hasan & Mehregan, Nader (2014). “The Impact of  Commercial Banks Monopoly Power on Effectiveness of Monetary Policy in Iran Economy” Journal of Economic Development Policy, Vol. 2, Issue. 4, pp. 9-39.

    - Nadiri, Mohammad & Mohammadi, Teymoor (2011). “Estimating an Institutional Structure in Economic Growth Using GMM Dynamic Panel Data Method”, Quarterly Journal of Economical Modeling, Vol. 5, Issue. 15, pp. 1-24.

    • Nazarian, Rafic; Farhadipour, Mohammad Reza & Faraji, Ali (2012). “The Impact of  Banking Competition on the Efficacy of Transmission Mechanism of Monetary Policy Through the Banking Lending Channel”, Quarterly Journal of Trend, Vol. 20, No. 61 and 62, pp. 43-73.


    AbduLKarim, Zulkefly; Wan Ngah, Wan Azman Saini & Abdul Karim, Bakri (2010). “Bank lending channel of monetary policy: dynamic panel data evidence from Malaysia”, Jornal of Asia-Pacific Business, Vol. 12, Issue. 3, pp. 225-243.

    Bernanke, Ben & Alan Blinder (1988). “Credit, Money and Aggregate Demand”, NBER Working Paper Series, No. 2534, available at:

    Bernanke, Ben & Mark Gertler (1995). “Inside the Black Box: The Credit Channel of Monetary Policy Transmission”, Journal of Economic Perspectives, Vol. 9, Issue. 4, pp. 27-48.

    Bluedorn, John; Bowdler, Christopher & Christopher Koch (2017). “Heterogenous Bank Lending Responses to Monetary Policiy: New Evidence from A Real-Time Identification”, International Journal of Central Banking, Vol. 13, Issue. 1, pp. 95-149.

    Boivin, Jean; Kiely, Michael & Frederic Mishkin (2010). “How has the Monetary Transmission Mechanism Evolved Over Time?”, NBER Working Paper, No. 15879, Available at:

    Bustamante, Jose; Cuba, Walter & Rafael Nivin (2019). “Determinants of Credit Groth and the Bank Lending Channel in Peru: A Loan Level Analysis”, BIS Working Papers, No. 803, available at:

    Ehrmann, Michael; Gambacorta, Leonardo; Martinez-Pages, Jorge; Sevestre, Patrick & Andreas Worms (2001). “Financial Systems and the Role of Banks in Monetary Policy Transmission in the Euro Area”. ECB Working Paper, No. 105, Available at:

    Hussain Khan, Habib; Ahmad, Rubi Binti & Chan Sok Gee (2016). “Bank Competition and Monetary Policy Transmission through the Bank Lending Channel: Evidence from ASEAN”, Internal Review of Economics & Finance, Vol. 44, pp. 19-39.

    Kashyap, Anil & Jeremy Stein (1995). “The Impact of Monetary Policy on Bank Balance Sheets”, Carnegie- Rochester Conference Series on Public Policy, Vol. 42, pp. 151-195.

    Kashyap, Anil & Jeremy Stein (2000). “What Do One Million Observations on Bank Have to Say About the Transmission of Monetary Policy”, American Economic Review, Vol. 90, Issue. 3, pp. 407-428.

    Kashyap, Anil; Stein, Jeremy & David Wilcox (1993). “Monetary Policy and Credit Conditions: Evidence from the Composition of External Finance”, American Economic Review, Vol. 83, Issue.1, pp. 78-99.

    Kishan, Ruby & Timothy Opiela (2006). “Bank Capital and Loan Asymmetry in the Transmission of Monetary Policy”, Jornal of Banking and finance, Vol. 30, Issue. 1, pp. 259-285.

    Kuttner, Kenneth & Patricia Mosser (2002). “The Monetary Transmission Mechanism: Some Answers and Further Questions”, Jornal of Economy Policy Review, Vol. 8, Issue. 1, pp. 15-26.

    Kwan, Simon (2010). “Fanancial Crisis Bank Lending”, Federal Reserve Bank of San Francisco Working paper 2010-11, Available at: publications/economics/papers/2010/wp10-11bk-pdf

    Leroy, Aurelien (2014). “Competition and the Bank Lending Channel in Eurozone”, Journal of International Financial Market, Institution and Money, Vol. 31, pp. 296-314.

    Lijane, Lebohang (2007). Essays in Firm-Level Costs of Corruption and the Transmission of the Monetary policy Shocks to the Real Economy, Michigan: Proquest.

    Matousek, roman & Helen Solomon (2018). “Bank Lending Channel and Monetary Policy in Nigeria”, Research in International Business and Finance, Vol. 45, pp. 467-474.

    Meta Athik (2012). “Bank lending channel in Slovenia: Panel Data Analysis”, Prague Economic papers, Vol. 2012, Issue. 1, pp. 50-68.

    Mishkin, Frederic (1996). “The Channels of Monetary Transmission: Lessons for Monetary Policy”, NBER Working Paper Series, No. 5464, Available at:

    Ozsuca, Ekin Ayse (2012). “Banks and Monetary Policy Transmission Mechanism: An Empirical Analysis for Turkey”, a Thesis Submitted to the Graduate School of Social Sciences, Turkey: METU.

    Stein, Jeremy (1998). “An Adverse-Selection Model of Bank Asset and Liability Management with Implications for the Transmission of Monetary Policy”, RAND Journal of Economics, Vol. 29, Issue. 3, pp. 466–486.

    Van Den Heuvel, Sander (2007). “The Bank Capital Channel of Monetary Policy”, Working paper The Wharton School, University of Pennsylvnia, Available at:

    Worms, Andreas (2001). “The Reaction of Bank Lending to Monetary Policy Measures in Germany”, ECB Working paper, No. 96.

    Yang, Jan & Shao, Hunhua (2016). “Impact of bank competition on the bank lending of monetary transmission: Evidence for china”, International Review of Economics and Finance, Vol. 43, Issue. c, pp. 468-481.

    Golodniuk, Inna (2006). “Evidence on the Bank-Lending Channel in Ukraine”, International Business and Finance, Vol. 20, Issue. 2, pp. 180-199.