Study On China’s Monetary Policy Tools Under Dual Structure Of Shadow Banking And Traditional Banking System

Since 2008, the scale of China’s shadow banking has expanded rapidly, and the dual structure of shadow banking system and traditional banking system has been formed. The dual financial structure produced a more profound impact on the financial markets and the real economy than before. Although there’s a big difference compared to the shadow banking system of the developed countries, it interferes with the window guidance caliber of central bank’s monetary policy, amplify the money supply in the market or change the money supply channel, and affects the implementation effect of monetary policy. How to improve the operation of monetary policy objective system and optimize various monetary policy tools under the dual structure, to make the total social financing and structure including shadow banking at a reasonable level and effectively guide its direction and flow to make it consistent with the objectives of monetary policy, and effectively promote the transformation of economic growth mode and the strategic adjustment of economic structure naturally become an urgent problem to be solved.The research of this article is divided into two parts. Firstly, it gives a comparative analysis of implementation effect between the price-based and quantity-based monetary policy tools under the dual structure of shadow banking system and traditional banking system. The paper introduces the shadow banking system into the economic system, builds a complete DSGE model including family, commercial banks, shadow banks, firms and central banks, and compares the impulse response of shadow banking loans, shadow banking lending rates, domestic output, the impact of inflation to the price-based and quantity-based monetary policy tools. Secondly, it compares the implementation effect of price-based monetary policy tools under the dual structure and market interest rate structure. In this part, the model is extended and the department is divided into intermediate manufacturers, financial manufacturers and capital producers. It compares the impulse response of output, consumption, capital accumulation, inflation on the price-based monetary policy tools under the dual structure and market interest rate structure.The results show, for the price-based monetary policy tools, it has the greatest impact on the shadow banking loans, followed by the domestic inflation, shadow banking lending rates and domestic output; for the quantity-based monetary policy tools, it has the greatest impact on shadow banking loans. The degree of impact on other variables is followed in turn by shadow banking lending rate, domestic output and inflation; For the comparison between quantity-based and price-based monetary policy tools, the impact of quantity-based monetary tools on output and the shadow banking loans is stronger than price-based monetary tools, and the impact of quantity-based monetary tools on shadow banking lending rate is weaker than price-based monetary tools. The impact of both kinds of monetary policy tools on the inflation are basically the same. The main economic variables such as output, consumption, inflation, capital accumulation under the dual structure have a similar response pattern to the market interest rates structure, but the response magnitude is weaker than that of the latter structure. The impulse response of price-based monetary tools is weakened to a certain extent.