Has the credit channel of monetary policy transmission changed over time due to banks increased recourse to financial markets?

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By transmission mechanism of monetary policy is intended the way in which a policy decision eventually affects the real economy. The policy decision impacts on many macro-variables with a certain time lag. The objective of the research in object is to study whether or how the transmission mechanism, has changed in the light of recent innovation introduced by the European Central Bank. ECB had an instrumental role in the revival of securitisation in the aftermath of the great recession. The Central Bank has used asset-backed finance as a policy lever to sustain the credit provision across the Euro Area by relaxing Asset Backed Securities (ABS) requirements as collateral for its open market operations (2008) and later by starting the ABS Purchase Programme (2014). This activity may have caused a change in the way the monetary impulse is transmitted through the banking sector in the Euro Area, enhancing its role for monetary policy as the banks are originating loans to package them and pledge them as collateral for repos or directly sell them to ECB.Recourse to financial markets enhanced credit provision and gave banks a toolkit to manage their funding cost, regulatory capital requirements and leverage levels. Hence a policy decision will cause multiple consequences on intermediated lending, which may be different in an integrated capital market as compared to a decade ago.