Research On The Effect Of Dual-Pillar Regulatory Framework On The Bank Risk-Taking

The outbreak of the financial crisis in 2008 meant that traditional monetary policy was not working well enough to achieve both price stability and financial stability,and academics and industry in various countries were actively looking for ways to maintain financial stability,and generally found two ways out.The first way out is to find the causes from within.As monetary policy is an important tool for macroeconomic regulation,some scholars have suggested that there is a transmission channel for monetary policy targeting financial stability,among which the risk-taking channel has attracted widespread attention from scholars.This channel emphasizes the risk appetite of financial institutions,which has been neglected before.Its specific transmission effects can be divided into two categories,one is that loose monetary policy will lead to increased bank risk-taking;the other is that loose monetary policy will reduce bank risk-taking.Is there a risk-taking channel of monetary policy in China and which transmission effect will occur? This needs to be studied in depth in the context of the long-term implementation of an accommodative monetary policy in China.The second way out is to find another effective way to prevent systemic risk.At present,macro-prudential policy is considered an important tool to prevent systemic risks.Macro-prudential policy was not first proposed after the financial crisis,but the previous studies were conducted only in the theoretical aspect,and after the financial crisis,the international regulatory authorities pushed the research from the theoretical to the practical level.The report of the 19 th National Congress of China clearly points out that the dual-pillar regulatory framework of monetary policy and macro-prudential policy should be improved.Can macro-prudential policy play a positive role and can it be effectively integrated with monetary policy? In the context of constructing a comprehensive macro-prudential policy framework in China,it is important to conduct an in-depth study on this issue.This paper investigates the transmission effect of the risk-taking channel of monetary policy and the integration effect of monetary policy and macro-prudential policy through theoretical analysis and mathematical derivation,and then empirically tests them with econometric methods.Specifically,the balanced panel data of 102 commercial banks(including 5 state-owned banks,12 joint-stock commercial banks,61 urban and rural commercial banks,and 24 other commercial banks)in China from2008-2019 are selected for regression analysis using Stata.It is found that: first,monetary policy risk-taking channels do exist in China,and the effects of risk-taking channels caused by different monetary policies differ.Second,macroprudential policies in China are effective in reducing the level of bank risk-taking when used in isolation.Meanwhile,bank loan ratio is a key variable in the transmission mechanism of macroprudential policy,and macroprudential policy reduces bank risk-taking by lowering the ratio of bank loans.In addition,banks of different nature are sensitive to macroprudential policies to different degrees.Third,the different ways of matching the policy loosening and tightening of monetary policy and macroprudential policy affect the policy integration of the two.An accommodative monetary policy and a tightened macroprudential policy can be effectively integrated,while a simultaneous tightening of both policies cannot effectively play the role of the dual-pillar regulatory framework.