| Since the global financial crisis of 2008,advanced economies,including the United States,United Kingdom,Japan,and Europe,have implemented a range of new monetary policy instruments aimed at maintaining financial stability,ensuring ample liquidity,and reducing long-term interest rates.Notably,these new collateral-based monetary policy tools,such as the Term Securities Lending Facility(TSLF)by the Federal Reserve,the Stimulative Bank Loan Facility(SBLF)in Japan,and the Long-Term Refinancing Operations(LTRO)in Europe,are all designed to inject liquidity into commercial banks based on specific eligible collateral.With the gradual reduction of foreign exchange deposits by the People’s Bank of China,the significance of the forex-based monetary issuance approach has diminished,resulting in a transformation of the channels for fundamental money supply.Post-2013,drawing from the implementation experiences of new monetary policies in advanced economies,the PBOC introduced a series of collateral-based monetary policy instruments,including Standing Lending Facility(SLF),Medium-Term Lending Facility(MLF),and Pledged Supplementary Lending(PSL),aiming to strategically inject liquidity into the market.Unlike the traditional monetary policy tool such as refinancing,these new monetary policy instruments provide banks with liquidity through collateralization rather than credit-based methods.The central bank includes a certain category of assets in its collateral scope,signifying that commercial banks holding such assets can pledge them to the central bank for lower-cost collateralized financing.Moreover,the implementation of this policy has also increased the scarcity of assets,effectively serving as an indirect "guarantee" by the central bank through national credit for enterprises issuing qualified collateral,thereby enhancing the financial position of enterprises’ balance sheets and improving their access to financing(Guo and Fang,2021).Therefore,by incorporating bonds or credit assets into the scope of eligible collateral,the central bank can directly exercise targeted control over the asset side of commercial banks,enhancing these banks’ credit resource allocation preference and willingness to lend towards specific assets.This guidance directs funds into the real economy,specific policy-supported sectors,and sectors facing liquidity shortages,thereby reinforcing support for the real economy and promoting local economic growth.However,when the central bank includes less liquid assets in the collateral framework,it can also lead to banks bearing excessive risk,thereby triggering a series of potential adverse consequences.To address this,further refinement of the collateral system framework details is necessary to mitigate potential adverse effects of policy implementation.Thus,it is evident that the exploration of changes in central bank collateral policies and their impact on enterprises,financial markets,and financial risks holds significant practical and theoretical significance.Therefore,this article attempts to address a series of questions from both micro and macro perspectives:Firstly,at the micro level,does the inclusion of corporate-issued bonds by the central bank as eligible collateral impact the investment and financing behavior of enterprises?Secondly,at the macro level,can these new collateral-based monetary policy tools effectively release the credit resources tied up in municipal investment bonds,thereby enhancing the lending capacity of local financial institutions,alleviating constraints on corporate financing,and fostering domestic demand while stabilizing employment?Lastly,with the incorporation of municipal investment bonds into the scope of eligible collateral and the subsequent injection of liquidity into the banking system,would there be a surge in credit allocation towards local government financing vehicles(LGFVs)by banks?Could this lead to distortions in credit resource allocation,intensify the risk of implicit local public debts,and concurrently heighten the risk exposure of local banks at the regional macro level?The present study focuses on the following research framework:Firstly,leveraging the event of the inclusion of AAA-rated corporate credit bonds into the scope of eligible collateral by the People’s Bank of China in 2015,this paper examines the potential credit financing effects at the microeconomic level resulting from the collateral-based new monetary policy.Secondly,an attempt is made to explore the impact of the collateral-based new monetary policy on economic growth from a macroeconomic perspective.On June 1,2018,the People’s Bank of China expanded the collateral scope of MLF,incorporating AA-rated and AA+rated corporate credit bonds as qualified collateral.This event exerted significant influence on municipal investment bonds,markedly enhancing both their price and liquidity.Simultaneously,prior to the expansion of MLF collateral criteria by the central bank,local financial institutions faced challenges in realizing and circulating their liquidity due to the substantial encumbrance of implicit debts that were difficult to convert.Consequently,following the policy implementation,the liquidity previously tied up by implicit debts within local financial institutions was liberated.This development contributes to facilitating investment and financing activities for local enterprises,thereby propelling regional economic growth.Lastly,the expansion of MLF includes municipal investment bonds in the scope of eligible collateral,which will enhance commercial banks’ willingness to lend to LGFVs,thereby improving LGFVs’ accessibility of financing.However,the escalating interest-bearing debt of LGFVs and the deteriorating profitability levels introduce heightened default risk.This elevates the risk-bearing capacity of commercial banks and consequently affects their performance.The main conclusions drawn from this study are as follows.Firstly,in Chapter Four,leveraging the quasi-natural experiment provided by the publication of the "Notice on Issuing the Guidelines for the Pledged Collateral Framework of the People’s Bank of China’s Re-lending and Standing Lending Facility(Trial)" by the People’s Bank of China in February 2015,this paper examines the impact of the implementation of the new monetary policy under the collateral framework on corporate financing and debt fund allocation.The study reveals that the policy implementation led to a significant increase in the debt-to-equity ratio of listed enterprises whose bonds were included as collateral,leading to a marked reduction in financing costs,thereby enhancing their debt financing capacity.Furthermore,the increase in the debt-to-equity ratio was driven by an elevation in corporate bank borrowing,with the proportion of bond financing remaining relatively unchanged.The central bank’s collateral framework primarily operates through financial intermediaries rather than the capital market.At the level of policy effects,the policy implementation can stimulate enterprises to increase investment.Simultaneously,cash retention and external financial investment returns of enterprises also witnessed significant growth.This suggests that not all newly acquired financing translates into investment in the real economy,indicating a certain degree of credit fund leakage effect.Secondly,in Chapter Five,utilizing the quasi-natural experiment resulting from the People’s Bank of China’s expansion of the scope of Medium-Term Lending Facility(MLF)collateral in June 2018,a double-difference model is constructed to identify the impact and mechanisms of the collateral-based new monetary policy on local economic growth.The study finds that incorporating qualified municipal investment bonds into the eligible collateral scope significantly boosts local economic growth.This conclusion holds under various variable settings and controlling for interfering factors,and is supported by parallel trend and placebo tests.Further investigation demonstrates that the expansion of collateral capacity releases credit resources occupied by implicit debts,significantly enhancing local financial institutions’ credit delivery capacity,promoting bank borrowing and fixed asset investment of local listed companies,augmenting labor force employment and employee compensation,and contributing to expanding domestic demand.At the macro level,it impacts residents’ employment(mainly secondary industry),income,and consumption.Thirdly,similarly leveraging the policy change on June 1,2018,which extended the collateral scope for the MLF by the central bank,and combining it with unbalanced panel data from commercial banks,Chapter Six examines the impact and mechanisms of the implementation of the new monetary policy on the risk-taking behavior of local banks.Empirical findings indicate that the implementation of the collateral-based new monetary policy substantially elevates the risk-bearing capacity of commercial banks.Mechanistic analysis reveals that policy implementation stimulates the increase in interest-bearing debt of LGFVs.Aggregated regression analysis at the macro urban level indicates that policy implementation will not only increase the issuance of municipal investment bonds but also augment the non-public issuance of debt by LGFVs.This suggests that incorporating municipal investment bonds into the eligible collateral scope not only enhances the liquidity of local banks but also significantly bolsters the debt financing capability of LGFVs.Nevertheless,the escalating debt scale of LGFVs,coupled with persistently deteriorating profitability levels,could augment the risk-bearing capacity of banks.Further research has also revealed that the concentration of credit resources towards LGFVs has multifaceted effects on bank performance.On the one hand,the increased holdings of LGFVs’debt by local banks significantly elevate bank costs,reduce interest income,and have a negative impact on bank performance.On the other hand,influenced by regulatory pressures and performance assessments,banks may employ surplus management tactics by reducing provisions for current loan impairments,stabilizing profitability levels,and enhancing bank performance.Compared to existing research,this paper may contribute to the academic field in the following aspects:Firstly,this paper enriches the study of the impact of new monetary policy on corporate behavior.To begin with,it contributes to the examination of the influence of collateral-based monetary policy on corporate debt financing behavior.It furnishes empirical evidence at the microeconomic level to enhance the effectiveness of collateral-based monetary policy.Furthermore,while existing research often focuses on how new monetary policy tools affect corporate bond credit spreads,this article investigates the impact of the central bank’s inclusion of corporate credit bonds in the eligible collateral range on corporate bank borrowing and bond financing.This,in turn,reveals the transmission channel through commercial banks,aiding a deeper understanding of the mechanisms behind collateral-based monetary policy.Lastly,the study presented herein assists in evaluating the implementation effectiveness of new monetary policy tools,specifically whether the liquidity released by the central bank can stimulate the real economy by boosting corporate investment or lead to fund immobilization and even intensify corporate financialization.Secondly,this paper adopts a unique perspective,focusing on municipal investment bonds,which enriches the research on the effects of new monetary policy on commercial bank credit allocation and macroeconomic growth.In the face of significant repayment pressure and liquidity risk arising from the accumulation of implicit local public debts,scant literature analyzes how to mitigate the impact of existing implicit debts on the liquidity of financial institutions.Accordingly,this paper innovatively employs a city-level debt burden disparity to construct a difference-in-differences approach,revealing that the implementation of new monetary policy can enhance the liquidity of local financial institutions in cities with high levels of implicit debts,thereby promoting bank credit allocation,corporate investment,and financing,and eventually transmitting to the macroeconomic level,affecting resident employment and consumption,consequently influencing the ultimate goal of monetary policy—economic growth.Thirdly,this article also enriches research on the channels through which monetary policy affects bank risk-taking and the behavior of commercial banks in credit resource allocation and surplus management.Existing literature primarily focuses on the impact of traditional aggregate monetary policies on bank risk-taking,with limited discussion on the effects of new monetary policy tools.There is scarce literature examining the impact and mechanisms of collateral-based new monetary policies on bank risk-taking levels.Furthermore,the research findings of this article indicate that fiscal pressures on local governments influence the allocation of credit resources by commercial banks,leading to higher levels of interest-bearing debt for LGFVs and consequently increasing the banks’risk exposure.Due to the need for banking institutions to comply with regulatory requirements,local banks will resort to surplus management to mitigate the adverse effects on their performance resulting from the flow of credit resources to LGFVs,thereby stabilizing accounting profits to meet regulatory pressures and performance assessment criteria. |
