The Effect of Monetary Policy on the Chinese Bank Liquidity Creation
Date Issued
2015
Date
2015
Author(s)
Hsieh, Pei-Ying
Abstract
In recent years, Chinese government actively implement monetary policy, is nothing more than hope to pull forward the development of China''s economic orientation. The banking sector as a financial intermediary, has a special position and role in the central bank''s monetary policy is passed, the banking industry if a good response of monetary policy, the implementation of its ""liquidity creation"" function, an important overall environmental impact of today''s China one of the factors. However, although the increase in market liquidity and create liquidity, but also causing bank debt maturity mismatch of assets is more serious, the government for the regulatory bank risk, bank liquidity creation leads to exert the function affected, but to take a more active bypass mode through Chinese-style shadow banking balance sheet items such as trust assets and other ways to create liquidity. Therefore, this combination of three elements: (1) banking sector liquidity creation function, (2) People''s Bank of China monetary policy, (3) the shadow banking factors discussed monetary policy implemented by the central bank through empirical research on China''s banking sector liquidity creation functions are affected, and then the final reaction in the real economy. At the same time, also after joining the shadow banking factors, whether the change will affect the results. Study found that regardless of whether the factors to consider shadow banking, bank liquidity creation functions will be subject to changes in monetary policy arising from changes in the central bank and presented significant negative correlation between the two, the implementation of the central bank to tighten monetary policy, said the bank will liquidity creation effect is reduced, and regardless of the five commercial banks, the national joint-stock commercial banks and city commercial banks are the presence of the same effect, indicating that monetary policy and bank liquidity creation can complement each other to change the market liquidity; the other hand, the paper also confirmed that the central bank the monetary policy will indeed consider the case of commercial banks liquidity creation, especially heavy discount rate and the one-year lending interest rate, and liquidity creation presents significant positive correlation, the greater bank liquidity creation, will make the central bank to tighten monetary policy to prevent the spread of liquidity too.
Subjects
Liquidity Creation
Monetary Policy
Commercial Bank
Shadow Bank
Central Bank
Type
thesis
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