Empirical Research On China's Regional Disparity In Monetary Policy Transmission

Since the reform and opening-up policy, China has in the process of economic transition adopted a regional development strategy through a sequential approach. As a result, the homogeneity in regional economy gradually died away. The uniform monetary policy generated asymmetrical effects throughout the country and some areas even suffered from completely adverse effects. It is therefore absolutely necessary and meaningful to research on the approaches to improve the effectiveness of monetary policy in the current dual structure of regional economy and finance.The past research in this field was mainly done in theoretical terms and the few empirical studies only verified the validity of regional disparity. This paper, however, set out in the perspective of monetary policy transmission. It applied the vector auto-regression model to analyze both the credit channel and the monetary channel in four regions. The differences in regional industrial structure, financial structure and company type structure were used to explain the results of empirical study. Finally, taken into consideration the reality in regional development, the author made some suggestions such as facilitating coordinated development of regional economies, establishing differentiated regional financial institutions system as well as building multi-level financial market system. These suggestions, on the premise of uniform monetary policy, were drawn up to narrow the regional disparities of economy and finance and thus create a promising background for improving the effectiveness of monetary policy.