The results reported in the paper cast serious doubt on the existence of a
potent bank-lending channel of monetary policy in New Zealand either before
or after the reforms of the mid-1980s.
We find no sound evidence of a link between a number of different finance m
ix variables and economic activity in New Zealand. Similar, unfavourable re
sults are reported by the investigation of the connection between movements
in an interest rate spread and real economic performance. Moreover, neithe
r the finance mix variables nor the spread respond consistently to changes
in various indicators of monetary policy.