Research on the Credit Channel of Monetary Policy Transmission

Author: Li Anyong
Publisher:
Publish Date: 2006-09-01
Features: This book conducts theoretical and empirical research on how bank behavior affects the transmission of monetary policy under incomplete information in the credit market. Theoretical analysis shows that the existence of the bank credit channel amplifies the impact of monetary policy on the real economy. When monetary policy is loosened, the bank credit channel amplifies the inflationary degree of nominal interest rates and exchange rates during the adjustment process of the economy towards a new long-term equilibrium, strengthening the positive effects of monetary policy on the economy. When monetary policy is tightened, the degree of contraction of nominal interest rates and the appreciation of the domestic currency are significantly enhanced during the adjustment process of the economy towards a new long-term equilibrium compared to a scenario without the bank credit channel, intensifying the negative effects of monetary policy on the economy. Taking China as an example, the empirical analysis concludes that the influence of the bank credit channel indeed exists in China's monetary policy transmission process and has a significant impact on it. This is of great importance for us in judging and grasping the "looseness" and "tightness" of monetary policy. This book employs a combination of theoretical analysis and empirical research. First, based on classical financial and monetary theory, it deepens the theoretical research on the international cutting-edge issue of the credit channel in monetary policy transmission. Then, it combines China's actual economic operation data for empirical testing. This book has high academic value and theoretical guiding significance in terms of financial theory innovation and improving the effectiveness of China's monetary policy.