TITLE:
The Transmission Channels between Financial Sector and Real Economy in Light of the Current Financial Crisis a Critical Survey of the Literature
AUTHORS:
Georgios L. Vousinas
KEYWORDS:
Transmission Channels; Bank Lending Channel; Financial Crisis; Regulation; Liquidity
JOURNAL NAME:
Modern Economy,
Vol.4 No.4,
April
26,
2013
ABSTRACT:
The present study undertakes a critical
review of the research around the major issue of the transmission channels between
financial sector and real economy. The aim of the study is to shed light on the
interaction between the financial system and the economy, in the shadow of the
current crisis. The literature documents the importance of these channels in
the determination of economic activity and therefore, real economy as a whole.
The study highlights the emergence of the liquidity channel as a key factor of
the transmission of bank credit shocks to real economy and underlines the
existing “regulation gaps”. The paper concludes that the financial sector plays
an even more crucial role these days and drastic measures along with intense
supervision must be undertaken so as to work properly and serve the economic
world.