The Research On The Impact Of Capital Requirements On Credit Channel Of Monetary Policy

At present, the credit channel of monetary policy has become the most important channel of monetary policy. Commercial bank as the main part of the credit channel will affect the credit channel of monetary policy.Since the implement of Basel Accord, bank's capital has been the focus of regulatory authorities. After financial crises in 2008,regulatory authorities make more stringent regulatory constraints.It will affect the credit channel of monetary policy.We pay attention to the impact of the commercial banks among which the capital levels are different on the credit channel of monetary policy.This paper is divided into some parts as follow.The first part is introduction, which introduced the background and significance of this paper; current research fruit both home and abroad; framework and line of thought of the paper, and the innovation of this paper. Second, we research the path of the impact of capital requirements on the credit channel.We point out that the role of bank's capital in the credit channel and analyze the impact of capital requirements on the credit channel of individual bank and credit market. Then we construct the models of the impact of individual bank's capital requirement on the credit channel.We analyze the impact of banks of capital adequacy and capital shortage on the credit channel respectively and the impact of capital requirement on the credit market. The fourth part is the empirical part. We use the data of Chinese banks during 1998-2009.We find out banks of capital adequacy can make the monetary policy efficiency and banks of capital shortage can not do it.The last part is conclusion. We make a conclusion and give some suggestions.The innovative points are as follows:First, when we construct models, we considered the actual situation in China. The loan interest rates of commercial banks are impacted by the benchmark lending rate of central bank.And as the interest rates in China are controlled, the commercial banks have to choose the quantity of loan supply to make profit maximize.We also consider that the market structure of banking in China is monopolistic competition. Second, when we research the credit market, we research all the banks'capital is adequate, all the banks'capital is not adequate, and the two parts are all in the credit market.