The Empirical Research On The Impact Of Social Financing Scale To Monetary Policy Target

Since China’s Central Economic Work Conference first proposed to "maintain a reasonable social financing scale" in December 2010,this indicator has been written into the Central Economic Work Conference document and the "Government Work Report" almost every year.At the 2013 seminar on "Monitoring and Evaluation of Financial System Changes after the Crisis" held by the Bank for International Settlements,the People’s Bank of China formally introduced the concept of social financing scale,which was recognized by the international community and participating experts.In 2016,Premier Li Keqiang first proposed the regulation of social financing scale in the "Government Work Report",that is,"this year’s broad money supply is expected to grow by about 13%,and the balance of social financing scale will increase by about 13%".In the "Government Work Report" in 2019,Premier Li Keqiang further pointed out that maintaining the growth rate of social financing scale matches the nominal GDP growth rate in order to better meet the needs of economic operations to maintain a reasonable range.It can be seen that the concept of social financing scale has become an important monitoring and analysis indicator of financial macro-control.In recent years,China’s social financing channels and its structure have undergone tremendous changes.The proportion of traditional bank credit in social financing has been declining,while the proportion of direct financing has been increasing,and the financing structure has been diversified.This brings severe challenges to the effective implementation of monetary policy regulation and the stable operation of the macro economy.Studying the scale of social financing will not only help analyze the rapid development of non-bank financial institutions in recent years and provide a deep understanding of China’s total social financing and structural changes,but also provide a basis for the central bank’s macro-prudential supervision.It will also provide information support for China’s supply-side structural reforms,prevent and resolve financial risks,and promote the realization of monetary policy goals.Based on the above research background,this article applies theoretical and empirical analysis,combined with the national conditions of the country,to comprehensively and thoroughly analyze the impact of social financing scale onChina’s monetary policy objectives.This article is divided into six parts.The first part is introduction.This part introduces the research background and significance of the thesis,summarizes the literature review at home and abroad,proposes the research content and methods,and finally points out the innovations and deficiencies.The second part is the development status and structure analysis of social financing scale.This part mainly introduces the total amount and characteristics of China’s social financing scale since 2002,and elaborates on the development of its specific constituent indicators.The third part is an empirical analysis of the impact of the social financing scale on the operation target of monetary policy.In this part,BM(Base Money),IOR(Interbank Offer Rate),IBRR(Interbank Bond Repo Rate),RRR(Reserve Requirement Ratio),and ERR(Excess Reserve Ratio)are selected as the research indicators of monetary policy operation targets.By constructing a VAR model,the impact of the scale of social financing on the operational goals of monetary policy is analyzed.The fourth part is an empirical analysis of the impact of social financing scale on the intermediate target of monetary policy.In this part,M2(Broad Money Supply)and YTM(Yield to Maturity)are selected as the research indicators of monetary policy intermediate targets.By constructing a VAR model,the impact of the scale of social financing on the intermediate goals of monetary policy is analyzed.The fifth part is an empirical analysis of the impact of social financing scale on the ultimate target of monetary policy.In this part,CPI(Consumer Price Index)and GDP(Gross Domestic Product)are selected as the research indicators of monetary policy ultimate targets.By constructing a VECM model,the impact of the scale of social financing on the ultimate goals of monetary policy is analyzed.The sixth part is empirical conclusions and policy recommendations.The conclusion is drawn through empirical analysis and corresponding policy recommendations are proposed.This article draws the following main conclusions through empirical analysis:In terms of the impact on the operation goals of monetary policy,changes in the scale of social financing will have a positive effect on the base money,and an increasein the scale of financing will prompt the monetary authority to increase the base money to maintain the stability of currency supply and demand.Changes in the scale of social financing will have a positive effect on the interbank offer rate and interbank bond repo rate,and this effect will fluctuate in the short term.Changes in the scale of social financing will have a positive effect on the reserve requirement ratio.To prevent the credit scale from growing too fast,the monetary authorities will intentionally increase the reserve requirement ratio.As for the excess reserve ratio,changes in the size of social financing will have a negative effect on it.When the demand for funds is strong,commercial banks and their deposit institutions will reduce the excess reserve ratio to obtain more loanable funds.In terms of the impact on the intermediary goals of monetary policy,changes in the scale of social financing will have a positive effect on the broad money supply,which is conducive to the mutual complementation of social financing scale and broad money supply,and provides an empirical basis for the "two intermediary goals and two transmission mechanisms" model.Changes in the size of social financing will also have a positive effect on long-term interest rates,which can be explained by the theory of full expectation and the theory of liquidity premium.In terms of the impact on the ultimate goal of monetary policy,changes in the scale of social financing will have a positive effect on CPI and GDP.As long as the financing scale increases moderately,it will promote economic growth.Based on the above empirical results,the following policy recommendations are proposed: Appropriately expanding the statistical caliber of social financing scale and feeding back deeper financial information.Optimize the proportion of financing structure so as to maintain a reasonable increase in the scale of social financing.Improve the interest rate control system through social financing scale indicators,and use monetary policy tools flexibly and comprehensively to promote the realization of monetary policy goals.