Research On The Influence Of China’s Monetary Policy Adjustment To Banking Systemic Risk

The world frequent outbreak of the financial crisis has motivated researchers to reflect on the reasons, drawn worldwide attention to financial stability. Some scholars believe that the loose monetary policy is the main reasons for the crisis. A growing amount of research shows that there is a closely relationship between monetary policy and financial stability. A" successful monetary policy" which controls inflation and promotes economic growth, could be influence to the banking systemic risk through bank risk taking channel. This article began to study relationship between the adjustment of monetary policy and China’s banking system risk.In this paper, adopting time series analysis of data from the 16 listed banks market, made a dynamic study of the influence of China’s monetary policy adjustments to Bank systemic risk. The structure of this paper consists of three parts: the first part structures a virtual bank portfolio based on the industrial and commercial bank, construction bank and Bank of China, studied on correlation of stock returns between individual banks and virtual bank, confirmed the existence of systemic risk of banks; the second part using the event analysis method t test to analyze price based monetary policy announcement effects on the systemic risk of banks, research results show that the tightening of monetary policy effect on the Bank system risks is not significant, expansionary monetary policy will significantly enlarge the systemic risk of bank; the third part using the panel data regression analysis monetary policy through the number channels function in the bank system risk mechanism, the increased money supply significantly enlarged Banking systemic risk.Based on the conclusions of this study, the loose monetary policy significantly amplify the bank systematic risk, which has practical and theoretical significance: monetary policy should be more proactive response to the financial imbalances, and through dynamic monitoring the accumulation of bank system risk, the central bank should be prudential supervision, establishing monetary policy mechanism against the wind, taking the financial stability into account.