Research On The Conduction Mechanism And Macroeconomic Effect Of Credit Supply In China

The outbreak of the global financial crisis in 2008 proved that the dominant theory of the real business cycle(RBC)has significant flaws.Both traditional monetary economic theories and New Keynesianism focus on the regulation of macroeconomic variables such as interest rate and exchange rate,often ignoring the influence of bank credit factors on the development of real economy and economic fluctuations.The 19th CPC National Congress called for China’s financial system to serve the real economy,guard against and defuse major financial risks,and promote China’s economic transformation and high-quality growth.On the one hand,we will give full play to the function of the financial market in allocating resources,and on the other hand,we will minimize the negative impact of financial market fluctuations on the real economy.Based on this background,this paper deduces the micro influence mechanism of credit supply on macro economy.Further empirical analysis is carried out from four dimensions of total regulation,structural optimization,price transmission and risk accumulation.Finally,from the perspective of macroeconomic policy,this paper explores the heterogeneity of the impact of credit regulatory policies on the effectiveness of monetary policy regulation on the three objectives of "economic growth,price stability and financial stability".The main conclusions of this paper are as follows:Firstly,based on the dynamic stochastic general equilibrium model,this paper explores the transmission mechanism of the impact of credit supply fluctuations on the macro economy from a micro perspective.It is found that the increase of credit supply can drive the rapid rise of investment level in the short term and promote the long-term accumulation of capital stock.Moreover,the expansionary influence of credit supply on investment will form a crowding out effect on consumption in the short term,making economic growth mainly rely on investment in the short term and mainly rely on consumption in the long term.On the basis of theoretical analysis,this paper further applies the time-varying transition probability Markov region transition regression(MS-GAS-TVTP)model.By identifying the periodic changes and time-dependent transfer of the fluctuation of credit supply and output in China,it is found that in the early stage of economic recession,the fluctuation of credit supply shows a strong "procyclical" characteristic,and the deterioration of economic environment will lead to credit contraction in a short term.However,with the gradual implementation of credit expansion policy,the guiding effect of credit supply on output gradually appears.Based on the time-varying cointegration model,the dynamic linkage relationship between credit supply and output is tested,and it is found that the dynamic linkage between credit supply and output in China is in the same direction.Credit expansion can drive China’s economic growth,credit contraction will further aggravate the degree of economic recession,and the time-varying influence coefficient of credit supply on output tends to be stable in the long run,and the two tend to long-term equilibrium.Secondly,considering that the credit expansion and contraction of commercial banks may have asymmetric effects on the macro economy,this paper further uses the nonlinear autoregressive distributed lag(NARDL)model to explore from the perspective of output growth and price stability.It is found that in the recession period,the expansion of credit can enhance the enthusiasm of enterprises to invest and promote the recovery of steady growth of the real economy.In the period of economic expansion,the driving effect of credit expansion on output will gradually weaken along with the accumulation of total output and aggravate inflation.Although credit contraction can reduce the level of inflation,it cannot completely offset the inflation risk brought by credit expansion,and will have a strong negative impact on economic growth.On this basis,this paper further explores the source of credit supply that promotes the growth of output and the rise of inflation in China from the perspective of term structure by using SV-TVP-FAVAR model.It is found that the increase of medium and long term credit supply in China can significantly promote economic growth,but it also has a strong role in promoting inflation.The non-financial enterprises’ medium and long term credit supply fails to occupy an advantage in promoting economic growth.Compared with medium and long term credit,China’s short term credit supply has no advantages in promoting economic growth.In China,the increase of short term household consumption credit has a negative influence on economic growth and will not cause strong inflation effect.It is proved that expanding domestic demand is one of the feasible ways to promote China’s economic growth and reduce the loss of inflation.Then,based on the perspective of price transmission,this paper further analyzes the impact of credit price fluctuations on macro economy under different economic conditions by using the smooth transfer vector autoregressive(ST-BVAR)model based on Bayesian estimation,and discusses the effectiveness of China’s credit price policies in different periods.The results show that in the recession period,the reduction of credit price can lead to the increase of consumption and the investment in the secondary and tertiary industries,and then drive the economic growth from the demand side.The transmission channel of credit price policy is basically smooth and the policy is basically effective.In economic expansion,interest rate marketization in our country is not fully and residents savings rate level is relatively high,there is "financial repression" and "depress consumption" dual inhibition phenomenon,The downward price of credit can only have a positive impact on economic growth by promoting investment in the tertiary industry,the second industry investment and consumption of transmission channels are existence obstruction,greatly reduce the validity of the credit price regulation policy.Next,from the perspective of risk accumulation,this paper further analyzes the impact of credit risk accumulation on China’s macro economy and the effectiveness of credit regulation and control by using the multi-direction quantile vector autoregressive(MDQVAR)model.It is found that the accumulation of credit risk has inhibitory effects on output,inflation and financial stability under different economic conditions,but the intensity of the impact gradually increases with the deepening of economic downturn,and the accumulation of credit risk has the strongest negative impact on financial stability.The effects of credit supply on output,inflation and financial stability show significant heterogeneity under different degree of credit risk accumulation.When "economic growth" is taken as the main economic goal,the accumulation level of credit risks should be controlled within a certain range,and neither excessive reluctance to lend in pursuit of low non-performing level nor excessive lending for investment expansion should be allowed.When to "stabilize prices and promote the currency" and "financial stability" as the main target,should be to avoid excessive lending and excessive debt,at the same time,strengthen the prudent supervision before and after the loan,to minimize the irrational competition behavior and intergenerational forgotten,as far as possible reduce the scale of non-performing assets of Banks’ assets,and accelerate the disposal process of non-performing assets.Finally,from the perspective of macroeconomic policy,this paper uses the multi-direction quantile vector autoregression(MDQVAR)model to explore the heterogeneity of the impact of credit regulatory policies on the effectiveness of monetary policy regulation on the three objectives of "economic growth,price stability and financial stability",providing a reference for better improving the framework of "Double Pillar".The research finds that in the economic downturn,the liquidity credit supervision policy can significantly enhance the quantitative monetary policy’s regulation effect on economic growth,but it will cause inflation problems.Therefore,it is necessary to make a choice between "promoting growth" and "stabilizing inflation".In the period of economic stability,the value-based credit supervision policy will weaken the promotion effect of quantitative monetary policy on economic growth to some extent.But the dynamic adjustment of credit supervision policy will not have a significant impact on the effectiveness of quantitative monetary policy.The two can be regulated separately,and the three major goals of "stable growth,stable inflation and stable financial sector" can be achieved at the same time.In the period of economic overheating,there is "policy conflict" between the value-based credit supervision policy and the price-based monetary policy,and it is difficult for them to achieve "financial stability" and "price stability" simultaneously in the dynamic regulation.Liquidity credit supervision policies can enhance the inhibition effect of price monetary policies on inflation.The coordination of the two policies can achieve the goal of "stabilizing finance and reducing inflation" at the same time,and "maintaining growth" to a certain extent,which is the optimal policy coordination mode in the period of economic overheating.In addition,monetary policy has no advantages in the regulation of financial stability,and credit supervision policy should be the main policy to maintain the stability of financial market.