Research On The Impact Of Financial Disintermediation On Conduction Mechanism Of Chinese Monetary Policy

As the core issue of the monetary system,the research of conduction mechanism of monetary policy and the choice of the optimal rule of time consistency,forward looking and stable monetary policy are always challenging and urgent problems.Meanwhile the theory that the monetary policy environment depends on its environment makes discussion of these issues more complex.Based on the premise of monetary transmission,financial disintermediation is the inevitable product of capital market development and financial market innovation,which of course has an impact on the realization of monetary policy transmission and even the ultimate goal of monetary policy.Specific to the practice of Chinese monetary policy,in the implementation of China's monetary policy issues there has been a "deviation from expectations" and "questioned the validity "for a long time,so is the efficiency of China's monetary policy implementation related to the financial disintermediation?Does the financial disintermediation reduce the marginal effect of quantitative currency instruments?Does the control of China's credit interest rate fragment the price signal transmission,thus hindering the realization of China's monetary policy control objectives?Does the diversification of the financing structure caused by the financial disintermediation weaken the management capacity of central bank monetary tool liquidity,resulting in the weak effect of China's monetary policy control?On the premise of the existence of financial disintermediation,how should the People's Bank of China make China's optimal,forward-looking,steady monetary policy rules?Based on the realistic characteristics of China's monetary policy transmission,this paper associates financial disintermediation with the monetary policy transmission,analyzes the impact of financial disintermediation on the transmission mechanism of monetary policy,And then studies how to consider and control the possible impact of financial disintermediation in monetary policy regulation,to ensure the realization of monetary policy expectations.The main topic of this paper can be summarized as follows:Firstly,on the basis of relevant theory and literature review on the three aspects of financial disintermediation,monetary policy and the conduction relation between monetary policy and financial disintermediation,reviewed the phenomenon of China's financial disintermediation from the emergence,the development process and continuous deepening,constructed the financial disintermediation index DI to quantitatively measure the degree,and analyzed the trend characteristics and state transfer characteristics of financial disintermediation index DI by MR-ARMA model furthermore.The conclusion shows that:The China's financial disintermediation index DI did show a steady growth trend characteristics from the first quarter of 1992.The continuous deepening of the financial disintermediation is the result of the social financing structure's changes and the optimal allocation of assets,and the shadow of the bank's development has further promoted the deepening of financial disintermediation.While the financial disintermediation index DI rises,there are two significant differences of the level range,before 2006 around the 30%level range and after 2006 around the 50%level range.The empirical analysis of MR-ARM A model confirms the existence of the regime switching and the state transition,indicating that China's financial disintermediation index DI in the first quarter of 2006 appeared on the point mutation of a structure,which makes China's financial disintermediation from low to high transition state of rapid disintermediation and disintermediation state,and the probability of the state transitionis is small,which indicates that the state is stable.The main reason is that,the policy expansion,for example the reform of non-tradable shares,the start-up of the short-term bond market and the admittance of non-banking financial institution,made the demand for non deposit investment and direct financing to be released quickly,which stimulate the development of direct financing market effectively,leading to the structural change of financial disintermediation index DI.Then,to construct an extended IS model with dynamic disintermediation factors and a dynamic response VAR model,this paper analyzes the influence of financial disintermediation index DI on the interest rate transmission and credit transmission of monetary policy by empirical method on the idea of sub-channel inspection.The conclusion shows that,the deepening of financial disintermediation and the increasing sensitivity of interest rates in capital markets rationalize the interest rate conduction mechanism of China's monetary policy.The effectiveness of the interest rate transfer and the effect of the inverse cycle adjustment still depend on the specific level of the financial disintermediation index DI and the sign of the elasticity of the investment rate,but with the rise of the financial disintermediation index DI,the regulatory effect of interest rates on the output gap will be guaranteed.The emergence of financial disintermediation in fact provides a micro-base of price-type currency signal transmission in the context of poor interest rate pricing mechanism.At the same time,the impulse response analysis of the VAR model confirms that,the influence of financial disintermediation on credit transmission is characterized by its stage.The increase of financial disintermediation index DI,will strengthen the conduction of the policy signals from the quantity of money to the credit scale,but also will weaken the conduction of the policy signals from credit scale to investment variable.Overall,because of the substitution of direct financing for credit financing led by the financial disintermediation,China's credit transmission mechanism is greatly diminished under the influence of the financial disintermediation.At present,in the regulation mode that China's mainly focused on the number of money,the financial disintermediation actually weakened the impact of monetary policy on the final macroeconomic goals.Furthermore,this paper constructs a new Keynesian NK model on the macroprudential framework of output,currency quantity,interest rate,and asset price to describe the complete transmission mechanism of monetary policy on the basis of the test of the effect of monetary policy transmission mechanism in different channels.In this paper,the financial disintermediation index DI is set as the conversion variable,and the NK model is further extended to the NK-STVAR model by introducing the expected rule and the state smooth transition.This paper analyzes the nonlinear effect of the state transfer on the monetary policy transmission mechanism in the process of the financial disintermediation index DI.The conclusion shows that,the state transfer structure of the financial disintermediation index DI does lead to the corresponding smooth transition characteristics of monetary policy transmission,which confirms that the financial disintermediation index DI has a differential effect on the monetary policy transmission and the final target variable total output in the low-off and high-off states.More specifically,the deepening of the financial disintermediation has strengthened the interest rate transmission mechanism of monetary policy and the mechanism of asset price transmission,and weakened the monetary policy transmission effect based on the quantity of money and the credit channel to a certain extent.It shows that,it is the requirement of the optimal monetary policy that the changing choice of intermediary variables of monetary policy from quantity to price and the changing direction of the monetary signal transmission from credit channels to interest rate channels.Features can reflect the impact of financial disintermediation on monetary policy,in high-off state,to ensure the effectiveness of monetary policy transmission.Finally,according to the empirical conclusion of this paper,this paper puts forward some suggestions from the perspective of the effectiveness of monetary policy,that the government should accelerate the transformation of monetary policy regulation model and enhance the efficiency of monetary policy tools.The existence of the financial disintermediation has increased the difficulty of the People's Bank of China to use the liquidity management tool to adjust the money market.Meanwhile,the deepening of financial disintermediation provides an alternative mechanism for price-based transmission of monetary policy signals,which provides a microcosmic basis for the transfer of monetary policy from quantitative to price in the premise of non-marketization of credit interest rate.