In this paper, the empirical relevance of the credit channel for the explanation of monetary policy transmission in Germany during the period of monetary targeting from 1975 to 1998 is analyzed. While existing studies of the credit channel rely mostly on the analysis of monetary policy effects on balance sheet items, both quantities and financing costs are considered here in order to identify supply and demand effects on the credit market. Using vector autoregressive models, impulse response analysis and forecast error variance decompositions, strong empirical evidence for the effectiveness and relevance of a credit channel in Germany can be reported.