I have studied monetary policy transmission through the credit channel based on monthly financial statements of Brazilian banks from 2003 to 2017. I have come to the conclusion that banks which offer a higher amount of government subsidized credit originated from compulsory fund raising are less likely to be affected by changes in interest rates. Consequently, by keeping an economic growth policy through credit expansion the government is obstructing this channel of transmission and thus reducing the power of the monetary policy. Additionally, I concluded that banks continue to adjust their loan portfolios until months after the monetary shock, corroborating Bernanke and Blinder (1992), who observed that banks do not cancel existing contracts, but just refuse to create new ones. To finish, I observe a fly-to-quality effect in periods of tight monetary policy and a less liquid economy. Banks tend to cut down on high-risk loans rather than low-risk ones. Nevertheless, by keeping a high amount of government subsidized credit originated from compulsory fund raising, this effect is mitigated.