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Introduction: Monetary policy resolutions issued by central banks play effective role in economy when accompanied with interest variable. In Keynesian approach to finance, interest is treated as the main determinant underlying financial policy resolutions. Thus interest is a pivotal factor in monetary transmission mechanism. Tight monetary policy practices, essentially decreasing money supply, eventually lead to a slump in investments, total demand and national income due to the increase in real interest rates.

Objective: The aim of this study is to determine what type of effects do monetary policy practitioner in Turkey have on macroeconomic variables via the interest channel of monetary transmission mechanism.

Methodology: Based on this objective, variables that could help in unveiling CBT overnight interest rates, direct fixed capital investment (GSSO), real gross domestic product (RGDP), industry production index (SUE) and domestic producer price index (YUFE) variables and that could explain monetary functions of transmission mechanism’s interest channel were selected. For the variables constituting the research topic, collected data belong the period of 2003Q1–2018Q3.

Findings: In the study relation between the variables has been analyzed under two parts via harnessing Toda–Yamamoto casualty test. In the first part, results of Toda–Yamamoto causality test from RGDP, GSSO and interest rate (FO) variables have been presented. The results manifest that interest channel directly affects direct fixed capital investment and RGDP. Interest channel was found to be effective on these variables of the analysis. In the second part, Toda–Yamamoto causality test was harnessed for SUE, YUFE and FO variables. Interest channel did not provide a result that affected YUFE and SUE.

The purpose of this paper is to explore the role of monetary policy transmission mechanism channel on firms' investment spending. The focal point is to investigate the differential of monetary policy effects across sub‐sector firms' investment by examining the role of interest rates, and broad credit channel of monetary transmission.

The following research design has been employed in examining the relevance of both monetary policy channels. First, the firm user cost of capital as a proxy for the interest rates channel is constructed. Second, the neoclassical model of firm‐level investment function has been estimated using the dynamic panel data technique.

The results revealed that the monetary policy transmission mechanism works through both interest rate, and broad credit channels in influencing firms' investment spending in the Malaysian economy. Monetary policy has heterogeneous effects in respect of sub‐sectors of the economy. In the long‐run, the firm investment in the consumer products and services sectors are significantly affected by the interest rate and broad credit channels. However, the firm investment in the industrial products and property sectors has only been significantly affected by interest rates and broad credit channel, respectively.

The empirical results provide new evidence on the microeconomic effects of monetary policy in a small open economy (i.e. Malaysia) in two dimensions. First, this finding has supported the relevance of interest rates and broad credit channel of monetary transmission in a small open economy. Second, monetary policy effects are also heterogeneous by sub‐sectors of the economy, as some sectors (for example, consumer products, industrial products, and services) are significantly affected by monetary policy, and other sub‐sectors (for example, property) are not affected.

This paper aims to study the monetary transmission mechanism of China from January 1996 to December 2009 under endogenous structural breaks.

The study constructs a benchmark VAR model and then adds the proxy variables for four channels of monetary policy transmission as endogenous or exogenous variables in the model to study the transmission mechanism in China. Considering a number of reforms carried out in the economic and financial field in the past two decades and the possibility of structural changes in the monetary transmission mechanism, the methodology proposed by Qu and Perron is employed to allow for endogenous structural changes in the model.

By conducting a comparative analysis, conclusions can be drawn from this paper that bank lending is always the dominating channel for monetary policy to influence economy in China and the roles of the interest rate channel and the exchange rate channel have been improved in recent years. However, the role of the asset price channel in monetary policy transmission has weakened since late 2001.

This paper combines the quasi‐maximum likelihood procedure proposed by Qu and Perron in 2007 with a benchmark VAR model, thus providing a new approach to study monetary transmission mechanism and the conclusions can be more sensible.

The purpose of this study is to empirically analyze the role of sukuk in the monetary policy transmission mechanism through the asset price and exchange rate channels in the Indonesian economy.

Using the monthly data from January 2003 to November 2017, this study uses a multivariate vector error correction model causality framework. To examine the role of sukuk in the monetary policy transmission mechanism through the asset price channel, this study uses the variables of consumption, inflation, interest rates, economic growth and the composite stock price index. Meanwhile, to examine the role of sukuk in the monetary policy transmission mechanism through the exchange rate channel, this study used variables of inflation, interest rates, economic growth, foreign investment and exchange rate.

This study documented that sukuk has no causal relationship with inflation through asset price and exchange rate channels. Nevertheless, sukuk has a bidirectional causal relationship with economic growth through asset price and exchange rate channels. Sukuk is also documented to have a causal relationship with monetary policy variables of interest rate and stock prices through asset price and exchange rate channels. Finally, a unidirectional causality is recorded running from the exchange rate to sukuk in the exchange rate channel.

The finding of independence of the sukuk market from interest rates provides evidence that the trading of the sukuk in Indonesia has been in harmony with the Islamic tenets.

The relevant Indonesian authorities need to enhance both domestic and global sukuk markets as part of efforts to promote the sustainability of Islamic capital market development in Indonesia.

To the best of the authors’ knowledge, this study is among the first attempts to empirically investigate the role of sukuk in monetary policy transmission through asset price and exchange rate channels in the context of the Indonesian economy.

The market-based monetary policy framework has been favoured by Economic Community of West African States (ECOWAS) economies. Hence, this study aims to investigate the effect of monetary policy channels on the sectoral value added and sustainable economic growth in ECOWAS. Data from the World Bank and International Monetary Fund over 2013–2019 were sourced for thirteen member countries. ECOWAS is found to have very high inflation level, interest and exchange rates.

The study adopted the Driscoll–Kraay fixed-effects ordinary least squares regression (OLS) estimator.

The findings revealed that while the effect of monetary policy channels on the agricultural sector value added is largely heterogenous and significantly in-elastic, the one on the industrial and services sectors are overwhelmingly homogeneous and negative, but insignificant for the services sector. Moreover, the effect of monetary policy channels on sustainable economic growth is also homogeneously asymmetric, with imminent stagflation, while the interactive effects of monetary policy channels are heterogeneous on sustainable economic growth and economic sectors. Therefore, an inflation targeting monetary policy stance is generally recommended with prioritised exchange rate stabilisation amid sufficient fiscal space.

This is amongst the first studies to investigate monetary policy channels, sectoral outputs and sustainable growth in the ECOWAS region with a rigorous analysis and found implications for policy.

This study aims to review to what extent Islamic banks carry conventional monetary policy impulses. Hence, the authors focus to review on the presence or absence of an Islamic financing channel.

A systematic approach to the literature review was adopted. The search criterion is confined to empirical studies that examined the transmission of interest-based monetary policy through Islamic banks’ financing, particularly empirical studies that check the existence of an Islamic bank financing channel of conventional monetary policy. By adopting a systematic approach, over 40 empirical papers published in Scopus and Google Scholar were selected for review and analysis to suggest prospects for future analysis in this field.

The existence of Islamic banks may raise concerns for local central banks, particularly in terms of implementing monetary policies that rely on interest rates. Indeed, the specific nature of the business model of Islamic banks based on the sharing of losses and profits as an alternative to interest rate–based remuneration suggests a priori the non-transmission of monetary policy through these free-interest banks. Despite this, the actual asset structure of Islamic banks may facilitate the transmission of monetary impulses to the economy. Currently, there are limited and inconclusive empirical studies on how Islamic bank financing contributes to the transmission of monetary policy. Additional research is required to fully comprehend the response of Islamic banks to fluctuations in monetary policy interest rates, as well as the factors that impact their reactions.

This literature review is incredibly important as it thoroughly examines a critical issue from both academic and practical perspectives. Analyzing how monetary policy actions can be transmitted through Islamic bank financing is an important task that can provide insights for future research. A straightforward response to this inquiry could assist central banks in formulating effective monetary policy.

The purpose of this paper is to present a theoretical model and empirically verifies the transmission of monetary policy through the credit channel in Brazil. The study verifies if the monetary policy, the economic activity and the maturity of the inflation targeting regime affect the supply of credit.

The paper offers a review of the literature concerning inflation targeting credibility and the transmission mechanism of monetary policy through the credit channel, it develops a theoretical model based on Bernanke and Blinder and Ferreira and it seeks empirical evidence for the Brazilian economy using ordinary least squares, generalized method of moments and vector autoregressive.

The estimates indicate that the supply of credit is stimulated when the economy heats up, when the monetary authority reduces the interest rate and when the credibility increases. The evidence also indicate that the supply of credit is affected by the variables of the model, economic activity and employment are affected by monetary policy and the supply of credit exerts influence on both employment and output gap.

An important implication of this study is that, in inflation targeting emerging economies, such as that of Brazil, following a committed monetary policy to price stability which increases the credibility of the regime of inflation targeting and promoting macroeconomic stability represents a good strategy for improving the volume of lending to the private sector, thus stimulating economic activity and employment. What the findings do indicate is that developing credibility is crucial for emerging economies that are trying to grow, but with inflation being kept under control.

The paper presents the following theoretical and empirical contributions: the model incorporates the effect that the credibility of the inflation targeting regime has on the supply of credit and, the econometric approach provides evidence that the monetary policy, the economic activity and the process of anchoring of inflation expectations affect the supply of credit in Brazil. Moreover, the paper finds evidence that the credit channel acts as a transmission mechanism of monetary policy to the economy.

This paper presents an integrated overview of the empirical literature on the impact of all forms of unconventional monetary policy on macroeconomic variables and on markets.

This survey covers the findings concerning portfolio rebalancing, signaling, liquidity, bank lending and confidence channels.

The positive effect of QE announcements on stock and bond prices seems to be unified across studies. A contagion effect from US QE to other emerging markets is identified, while currency devaluation is present in most cases for the country that its central bank adopted such policies. Moreover, impacts of non-conventional practices on GDP, inflation and unemployment are examined. The studies presenting weak instead of strong positive effects on inflation are more, and these studies, also, present weak positive effects on GDP growth.

Based on the large body of research on non-conventional action taking, this is the first survey including effects of each country that adopted quantitative easing (QE) measures and that provides results from every methodology employed in order to estimate unconventional practices' impacts.

The purpose of this paper is to investigate the effectiveness of asset price channel in monetary policy transmission and the effect of stock market volatility on monetary policy in Kenya.

Empirical analysis is based on quantitative analysis which incorporates both descriptive analysis and empirical approach. The study specifically uses the VAR approach which is most appropriate for this kind of study involving analysis of policy shocks on macroeconomic variables.

The main findings of this paper are as follows: first, the evidence of the existence of the asset price channel of monetary policy transmission is mixed in Kenya. Second, while the effect of monetary policy on stock price volatility is not significant, stock market volatility creates instability in monetary policy variables, implying that information from the stock market may be important in predicting the business cycle.

The paper provides useful policy insights to academicians, economists and central bankers who are interested in understanding the financial stability‐monetary policy nexus. This is important considering that most economies are emerging from the effects of the global financial crisis and they are thus enhancing financial stability measures. No such study that the authors are aware of has been conducted using data for Kenya.