Effectiveness Of The Policy Of Reserve

Reserve, Rediscount and Open market operations are known as the "three magic weapons" of monetary policy, which, reserve because of the its multiplier effect of monetary policy would have larger impact on national financial and economy, so it is usually the central Bank's monetary policy tools with caution. However, China has frequently used this monetary policy which is called "ax" or "strong medicine". From January, 2010 to the present, China has raised the statutory deposit reserve ratio eight times, the current statutory deposit reserve rate is as high as 20% in China, a record high, and such frequent adjustment is extremely rare in the history of the world. As a monetary policy, the statutory deposit reserve ratio is by adjusting the amount of the reserve that the deposit-taking financial institutions turned over to the central bank to influent their credit create capacity, thereby affecting the money supply situation of the whole society, and through the change of money supply and demand to affect the market interest rates, ultimately affect the national investment, consumer spending and other economic activities. Therefore, the cause and effect of China frequent adjust the statutory deposit reserve ratio in recent years has in general become the focus attention of society; there are many current debates on the effectiveness of the reserve policy in Academic. This article is based on Scholars' from domestic and abroad research results about the reserve policy, use the research methods of qualitative analysis and quantitative analysis, combined theoretical analysis and application analysis to empirical study the macroeconomic effects of Reserve policy. This article from the perspective that reserve policy control the size of commercial bank credit, discussed the effectiveness of the reserve policy from the four aspects:1.To proceed with the balance between commercial banks' Source of funds and the application, theoretically investigate the main factors of the statutory deposit reserve policy.2.Research the usage of the statutory deposit reserve policy in China, and analyze the reasons for adjustments, then analysis the implementation effects of our reserve policy to discuss the reserve policy's the achievements, limitations and the reason of limitations. And analysis and comparison the state-owned commercial banks and shareholding banks' the implementation of effective on the statutory reserve policies.3.Get an empirical analysis on the effectiveness of the reserve policy, starting with the balance of commercial banks' source of funds and the usage, establish commercial bank lending model, use econometric theory and Eviews software to analyze data in order to clear the relationship between the commercial banks' credit scale, deposit reserve size and deposit scale. Which shows the effectiveness of our reserve policies and constraints.4.Made policy recommendations on improving the reserve system in China and promoting China's sustained, rapid and healthy development. The results show that: The China's reserve policy is effective, there does exist the reverse relationship between the reserve scale and the size of loans in our country. And the resulting effect of credit expansion by cut the deposit reserve ratio have a significant effect than the deposit reserve ratio increase produced credit crunch. The effectiveness of statutory reserve policies is mainly affected by commercial banks' the excess reserve rate, changes in deposit-scale and other sources of funding structure the three factors.