The Research On China’s Monetary Policy And Differences Of Bank Credit Behavior

Monetary policy has been China’s tool of macroeconomic regulation and control for a long time, its transmission mechanism has always been a research focus in the field of monetary economics.It’s significant to the formulation and implementation of monetary policy that to confirm how monetary policy transmit in the real economy, which will directly affect the effectiveness of monetary policy. Credit transmission mechanism of monetary policy is interesting between experts and scholars at home and abroad in recent years. The narrow credit transmission mechanism, also called the bank lending channel theory considers that banks and bank credit play an important role in the monetary policy transmission process; monetary policy affect bank credit behavior by changing the bank credit supply and demand.In recent years, China’s banking industry has a trend of diversity. Because of the establishment of new commercial banks, increasingly fierce competition appears among banks, which makes capital regulation put higher requirements forward to commercial banks. The operating environment of the commercial banks has also undergone a significant change. What different effect of monetary policy transmission will be between different commercial banks? Specifically, in the framework of the bank lending channel, what different reaction to tight monetary policy shocks will be if commercial banks have different asset size, different liquidity asset levels, different capital adequacy? What difference will the degree of reaction be? This is what this article most want to discuss. Which no doubt has important research value and policy implications to deepen the understanding of the transmission mechanism of monetary policy in China, Based on the above ideas, this paper is divided into six parts:The first part is the introduction of this article. In this chapter, I describe the research background and significance of this article, while this research method, structural arrangements and the conclusions are briefly discussed.The second part is the literature review of the bank lending channel. At first we briefly describe two types of views on the theory of the monetary policy transmission mechanism, and sum up the assumption to achieve the bank lending channel. After analysis and commentary on the empirical research literature at home and abroad, we determine the direction of this research.The third part is the theoretical analysis of bank behavior reaction to monetary policy change. According to the conclusion of foreign frontier research, we make expectations about the reactions of bank deposits behavior, loan behavior, liquid assets to tight monetary policy shocks as later empirical analysis, which will be tested in the later empirical analysis.The fourth part is the data. This part has two aspects:one is the selection and processing of the banks data; the other is the selection of a monetary policy indicators.Chapter five is empirical analysis. The chapter is also the most central part of this paper. Using bank data, we make models of the bank loan behavior, deposits behavior, liquid assets behavior. The main conclusions of this paper are:(1) In terms of loan, the loan reduction degree of joint-stock banks and city commercial banks is greater than large banks. Changes in liquid assets was positively correlated with the loan, the degree of the joint-stock banks and city commercial banks is greater.(2) In terms of deposits reduction, city commercial banks reduce the most, large banks follow, joint-stock banks the least. The capital adequacy ratio is inversely proportional to the growth rate of bank deposits, the degree of influence of large banks is the greatest.(3)In terms of liquid assets, we can not accurately verify the hypothesis of liquidity buffers. In order to satisfy the regulation of capital adequacy ratio, banks will hold more liquid assets to ensure capital adequacy.The last part points out the limitations and shortcomings, primarily about the data. This paper also gives several relevant policy recommendations:deepen the reform of large banks; optimize the effective regulation of commercial banks’ capital; monetary policy control for the different bank shall be differentiated.Overall, this paper has two main contributions:First, this paper adds new perspectives of research. In addition to bank loan behavior, we also discuss the reactions of bank deposits and liquid assets to tight monetary policy shocks. These don’t exist in later literature. Second, the data we use is non-aggregated bank’s micro-credit data, and is quarterly data, which is more accurate than the annual data. Of course, the paper may improve in modeling and quantitative analysis, I hope teachers give me good points and advice to this paper. I will continue to make it better and enrich my knowledge level.