Bank capital and monetary policy transmission in India

This paper examines the role of bank capital in monetary policy transmission India during post-global financial crisis period. Empirical results show that banks with higher capital-to-risk-weighted assets ratio (CRAR) raise funds at a lower cost. Additionally, CRAR transmit impulses smoothly, while stressed banking sector hinder transmission. Recapitalization to can improve transmission; however, above certain threshold level may not help as sensitivity loan growth rate reduces for threshold. Therefore, it be concluded influence credit supply depending on their position.