4 Supervisory information on banking activities, such as the use of credit transfer instruments and the relative importance of assets and liabilities held for trading, can be useful in enhancing this analysis. Another transmission channel often cited in the literature which has received increasing attention over the past two decades is the credit channel.
Owing to informational asymmetries and principal-agent problems between banks and their borrowers, monetary policy may impact on the supply of loans. This can happen through the narrow or broad credit channel.