This paper investigates why an expansionary monetary policy was ineffective in mitigating the credit-rationing problem in Korean bank loan markets in the early 2000s. We focus on the strict regulation on capital adequacy and the sticky implementation of the credit scoring system to explain monetary policy ineffectiveness. In a theoretical model, we show that, if the supply of loans responds more sensitively to the credit score than the demand for loans, an expansionary monetary policy cannot resolve the credit rationing problem. By estimating a disequilibrium model for bank loans, we find that excess supply existed in bank loan markets in the early 2000s, and thus expansionary monetary policy did not help to reduce disequilibrium in loan markets. This finding implies that banks should adjust the critical credit rate as well as interest rates for the efficacy of monetary policy.