| Monetary policy refers to the specific regulation and control measures of money supply, bank credit and market interest rate conducted by a country’s monetary authorities(mainly the central bank) for achieving the predetermined macroeconomic objectives. Monetary policy generally includes interest rate policy, exchange rate policy, credit policy and so on. Generally speaking, the purpose of monetary policy is to promote economic growth, stabilize prices, increase employment and domestic and international balance of payments. The effectiveness of monetary policy refers to whether the monetary policy can achieve its goal. However, the four objectives of monetary policy are conflicting in actual situations. Therefore, selection and coordination are needed among the four kinds of objectives, and the selection of single objective, double objectives and multiple objectives is generated under this circumstance. The effectiveness of credit channel and stock price channel studied in this paper refers to the influence on economic growth and price changes.Transmission of bank channel effect and stock price channel effect needs complete financial market mechanism, while China has a higher degree of regulation on financial market. Although China released the loan interest rate cap in 2014, the market reform on interest rate completed preliminary and the freedom and openness of financial market is also deepening, the development degree still needs to be improved. The prerequisite of credit transmission mechanism is that the central bank can effectively regulate the size of loan, and residents, enterprises have a high dependence on Commercial Bank loans. Since the central bank specially exercises management functions, China’s monetary policy instruments have become increasingly diverse and the transmission mechanism has been constantly improved. However, social financing structure is still dominated by indirect financing since 1988, residents and enterprises have a higher dependence on bank loans. Therefore, the credit channel still has an important role in China’s currency transmission. In addition, the continuous development of stock market and the increase of listing corporations promote the development of direct financing market, and stock price channel also begins to play the role. This paper firstly collects the literature and theory on credit channel and stock price channel, and makes comparative analysis between them. Then, this paper analyses the basic theory and realistic conditions of China’s credit channel and stock price channel transmission mechanism. The second part of this paper is empirical study. It takes data from the first quarter of 2000 to the fourth quarter of 2015, compares and analyzes the credit channel transmission effect and stock price transmission effect by VAR model. The variance analysis results show that the credit channel has a maximum impact on CPI and GDP, which indicates that credit channel plays a dominant role in China’s monetary policy transmission. Finally, it provides policy suggestion for opening up China’s credit channel and stock price channel, namely establish and improve the intermediate target of monetary policy system, vigorously develop the bond market and stock market, promote the development of direct financing, optimize the bank asset-liability structure, develop diversified financial market subject, thus to improve the transmission effect of China’s monetary policy, promote economic development and maintain price stability. |
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