Despite ultra-easy monetary policy in US, Eurozone and Japan, lending interest rate remains higher than expected profitability. However minimal lending interest rate in advanced economies diminishes the Central Banks' ability to stimulate economic growth. Paper argues that high interest rate is...

The paper explores the role of credit in business cycle and it is noted that one of the factors contributing to the cyclicity of economy is the difference between firms' profitability and interest rate on loans. The paper says that the amplitude of business cycles may be decreased through the...