The Research On The Relationship Between Monetary Policy Expectation And Bank Credit

The conduction mechanism of monetary policy has been the research focus in the academia. The monetary policy information released from the central bank to apply to the real economy needs a specific channel, and academic research formed many views on it. Early studies based on the IS-LM analysis framework, monetary policy affects enterprise investment scale through changing interest rates. Therefore, it is referred to as interest rate channel of the monetary policy transmission. It has an important assumption in the theory, that financial markets are complete, only two assets are in the market:bond and currency, and they are completely substitutes. When shocked by monetary policy, enterprises and households can adjust the holding ratio of two assets to change their behavior. With the progress of research, scholars have found that financial markets are not complete. There are many external financing cost, bond financing channel is not unobstructed. And under the contractionary monetary policy, the commercial bank’s credit is limited. So the credit channel of monetary policy transmission arises at this historic moment. In this channel, the changing of monetary policy affects commercial bank’s credit behavior, thus affects the scale of the enterprises access to capital, and finally affects the real economy. Credit channel view’s forming background was the widespread contractionary monetary policy in the1990’s. At the same time, the emergence of the "Basel Agreement" strengthen the regulatory capital of commercial bank, makes commercial bank’s credit constrained. After entering the21st century, as America’s dotcom bubble burst, the Fed’s loose monetary policy last for a long time. It began to appear the situation of excess liquidity in the market, the credit channel’s credit rationing phenomenon is not obvious. Loose monetary policy improved the commercial bank’s willingness to risk bearing, also caught the attention of the academia. Until the outbreak of the financial crisis in2007-2009, the bank risk-taking channel of monetary policy transmission was formally put forward. As a supplement of credit channel view, the bank risk-taking channel focuses on bank risk-taking willingness to affect bank’s credit behavior. The theoretical analysis foundation and the framework of them are the same.This paper is based on the credit channel and risk-taking channel’s theoretical framework, and combined with the actual situation in our country, to analyse the credit behavior of our country’s commercial banks in the situation of monetary policy transmission. We found that long-term liquidity surplus caused the commercial bank’s risk-taking willingness increased. In addition to control inflation and market risk, the prudent monetary policy constraint central bank’s the credit, both impact on our country commercial bank’s credit behavior. The former’s influence on the commercial bank’s credit behavior is positive, the latter is negative at the same time. Under this situation, the commercial bank’s credit behavior facing contradictory choices. Therefore, we need to add new factors in research, to analyze its impact on commercial bank’s credit. And in this case, the commercial bank how to make a trade-off between the two.In this article, we will distinguish and explain the factors first, which affect the behavior of commercial bank’s credit. We found they are macroeconomic factors, monetary policy, financial regulation and bank’s characteristic. According to the rational expectation theory, it proposed the commercial bank’s expectation of monetary policy. These factors influence the credit of commercial bank in the macro and micro level at the same time. And because of the bank’s own characteristics, the influence degree is not the same. In reference to previous empirical studies of the monetary policy transmission channels, and combined with the above factors, this paper chose the variables needed for the empirical analysis, and establishes empirical model. Then according to the collected variables, we selected20commercial banks’ data in China between2004and2011. Further more the20commercial banks are classified according to size and property rights.Through traditional regression results of the empirical model, this paper found that China’s monetary policy transmission channels access to credit and risk-taking is exist at the same time, and the characteristics of commercial banks is a significant influence on bank credit. Capital adequacy ratio although constrained the ability of commercial bank’s credit expansion, but enhanced the confidence of commercial bank’s stable operation. IPO also bind the credit expansion of commercial banks, but the banks with high capital adequacy ratio can expand their scale of credit easier through IPO. Large state-owned commercial banks have a more diversified financing channels when facing monetary policy shocks to its credit, its development is mostly in a fixed orbit operation. Through the introduction of monetary policy expectation variables in the regression model, this paper found that the commercial bank’s expectation of monetary policy exists, and effective influence the credit behavior of joint-stock commercial banks, but for the large state-owned commercial bank the influence is virtually non-existent. According to the conclusions, this paper puts forward five policy suggestions:(1) Commercial banks should improve their ability to resist risk through enhance their strength;(2) It should strengthen the supervision of state-owned commercial banks, promoting financial stability;(3) It should actively guide the bank’s capital flow to small and medium-sized enterprises;(4) It should strengthen the guide of commercial bank’s expectation;(5)It should strengthen the supervision of non-banking financial institutions, enable the transmission of monetary policy to real work.