Monetary Policy,Inter-bank Business And Bank Risk-taking

After the financial crisis in 2008 triggered global economic turbulence,many scholars began to shift their research direction to the relationship between monetary policy regulation and financial market stability.As an important branch of the financial system,the risk-taking behavior of commercial banks plays a crucial role in the stability of the financial system.Borio and Zhu(2008)put forward the theory of risk-taking channel of monetary policy for the first time in their research.They pointed out that under the loose environment of monetary policy,commercial banks have the motivation to change their risk preference and seek to gain more benefits by increasing the loan scale,thus improving their risk-taking level.The commercial banks in China from the beginning of the establishment has gradually formed a highly correlated banking system and a more stable business system.With the deepening of the shareholding system reform in China's commercial banks,the banks make very limited profits by the traditional credit business,and it is urgent to seek new profit growth point.Inter-bank business can provide commercial banks with off-balance sheet financing channels and avoid financial supervision by virtue of its convenience,which has been developing rapidly in recent years.The rapid development of inter-bank business has brought great risks and hidden dangers to commercial banks,which to some extent also affects the transmission of the risk-taking channels of monetary policyBased on this background,this paper firstly sorts out and summarizes relevant literatures at home and abroad,and makes a detailed analysis on the risk-taking channels of monetary policy.The panel data of 5 state-owned banks and 24 share-holding banks in China from 2008 to 2017 were used for GMM regression analysis,the empirical results show that:(l)the existence of the risk-taking channels of monetary policy in China;(2)the rapid development of inter-bank business will weaken the effect in the risk-taking channel of monetary policy;(3)the ownership of the banks will strengthen or weaken the weakening effect of inter-bank business' effect on monetary policy.Through the analysis of the empirical results,the paper puts forward relevant policy suggestions for China to maintain financial stability and prevent financial risks.The main conclusions of this paper are as follows;(1)There does have the risk-taking channel of monetary policy in China,s financial market.There is a negative correlation between monetary policy and the risk-taking of banks,the loose monetary policy earried out by monetary authorities will increase the risks taking of commercial banks,the tighter monetary policy will reduce the risks that commercial banks takes.Both the quantitative monetary policy and price-based monetary policy have the same effect on the risk-taking of commercial banks.(2)Under the control of tight monetary policy,the rapid expansion of inter-bank business of commercial banks will weaken the effect of the risk-taking channel of monetary policy and also hinder the realization of established policy objectives.(3)The ownership of commercial banks can influence the effect of monetary policy through inter-bank business,the expansion of inter-bank business of large state-owned banks has less effect on the risk-taking channel of monetary policy,while the expansion of that of joint-stock banks has a great effect on the risk-taking charnel of monetary policy.