This study aims to examine the importance of bank lending channel (BLC) in Indonesia by investigating the impact of monetary policy and bank-level variables (size, income, liquidity and capital) on bank loans. The BLC in Indonesia was examined using panel data sourced from 56 commercial banks during 2001 to 2014 and the Generalized Method of Moments (GMM) model. The novel bank level variable, such as bank income, was introduced to assess the effectiveness of BLC in the country. The findings established that monetary policy in Indonesia influenced bank loans through three variables, namely interest rate, bank income and total assets, hence indicating the BLC effectiveness. Further, the response of high-income banks to interest rate shocks was smaller than the low-income ones. The central bank in Indonesia can achieve the ultimate targets by changing the interest rate, and in consequence, adjusting loans and total demand.<\/p>\n","protected":false},"template":"","tags":[1614,180,387,1040,1615,116],"jel-code":[1617,1616],"article-type":[1329],"class_list":["entry","author-asriwn","post-8100","article","type-article","status-publish","tag-bank-income","tag-gmm","tag-indonesia","tag-interest-rate","tag-loans","tag-monetary-policy","jel-code-c100","jel-code-e50","article-type-normal-article"],"yoast_head":"\n