According to the theory of credit, monetary policies by central banks do not only affect commercial banks´ interest rates, but their asset structures as well. Restrictive monetary policy, which puts constraints on banks´ liabilities, necessarily results in a corresponding adjustment on the asset side, including the amount of credit on offer. The final shape and scope of such adjustment depend on the specific asset features of each bank. Those assets are not homogenous, i.e. they represent different degrees of liquidity, profitability and risk. These features - along with the nature of the relationships between the bank and its debtors - determine the extent to which monetary policy can influence credit supply. They are the key components of the transmission mechanism.

According to the research presented in the paper, the lack of homogeneity between two selected types of assets held by Polish commercial banks, i.e. loans and Treasury securities, has considerable consequences for the monetary policy as conducted by the National Bank of Poland. In the first few months following a shock change in the interest rate, the impact of monetary policy on credit supply is abated. That is because banks follow the buffer-stock behaviour pattern: in response to a tighter monetary policy, they reduce the growth in their Treasury portfolios (their most liquid assets) in a greater measure than the growth in their loan portfolios. In the longer term, as the original interest rate impulse wears off and its effects become ostensible in the form of higher credit market risk as perceived by banks, credit growth is further reduced, while bank-held Treasury portfolios are restored.

The inhomogeneity of bank assets and the specificity of debtor-bank relationships both create a lag in the effect of monetary policies by the NBP on credit supply. Moreover, there are certain macroeconomic factors which, while they perhaps do not delay credit response to monetary policies, they certainly weaken the impact. Those factors, whose role should diminish with time, include the following: structural overliquidity, state ownership existing in the banking sector, regulatory privileges resulting from this ownership and the nature of the guarantee system.

The next stage of credit transmission mechanism discussed in the paper is the link between bank credit and aggregate demand. The theory of financial intermediation holds that banks are a special type of financial intermediaries, as they finance both consumption and investment expenditure. The latter would be impossible without loans from banks to business units. The fall in the amount of credit available has therefore an immediate impact on the aggregate demand. In countries under transformation, which do not have a developed financial market, bank loans typically constitute the bulk of external financing. It has been evidenced that besides households, whose only source of external financing is the bank, most businesses depend - entirely or to a very great extent - on bank credit, both for their day-to-day operation and expansion. Of course one has to remember that internal financing still prevails in Poland, and so credit-driven expenditure accounts for a relatively small part of the aggregate demand. However, short of alternative sources of financing, potential recipients of credit are forced to reduce both their consumption and investment demand. In other words, part of the aggregate demand normally reliant on bank credit cannot be financed at all when this credit becomes short. Polish economy meets two prerequisites for the bank credit channel to function: substantial number of credited parties depend on banks as their sole source of external finance, and monetary policy has a bearing on credit supply. This connection is compromised by certain macroeconomic factors whose importance, however, should diminish with time.