Study On The Impact Of Financial Disintermediation On Monetary Transmission Mechanism Of China

In the 1960 s,“financial disintermediation” appears most early in USA. It refers that the supply and demand of the capital divorce from commercial banks and other financial intermediaries, the investment and financing occurs directly in the capital market and the money market. The emergence of financial disintermediation is a product of the development of financial market. As the proportion of direct financing in China’s total social financing become more and more big, and the proportion of deposits in residents’ financial assets is declining, especially with the rapid development of the internet finance and the “shadow banking” in recent years, the commercial banks’ pressure of the financial disintermediation is also increasing.Domestic researches on financial disintermediation are limited to simple description, or discuss measures of commercial banks under the situation of financial disintermediation. The in-depth researches, such as metric on China’s financial disintermediation and its influence on macroeconomic area, are less. However, changes in the financial system have a great influence on the transmission of monetary policy. Therefore, from China’s actual conditions, analysis on the scale of financial disintermediation in China, and the effect of financial disintermediation on the transmission of monetary policy in China from theoretical and empirical, has important theoretical guidance and reference meaning to the choice of China’s monetary policy tools and target, giving better play to the effect of macro-control.Combined the characteristics of China’s financial disintermediation with the purpose of this research, the financial disintermediation index(DIF) is defined as the division of the increment of RMB loans and the the amount of stock market financing, enterprise bond issuance and the increment of RMB loans, i.e. the proportion of indirect financing in the total financing. And use the index to measure China’s financial disintermediation degree between the first quarter of 1998 and the second quarter of 2014. The result shows that: during the first quarter of 1998 to the second quarter of 2005, our country is in the period of non financial disintermediation; and during the third quarter of 2005 to the second quarter of 2014, our country is in the period of financial disintermediation.In this paper, we analyze the influence of financial disintermediation on China’s monetary policy transmission mechanism of interest rates, asset prices and credit from theory and the empirical test. Financial disintermediation promotes the marketization of interest rates, increasing the interest rate elasticity of currency demand. Financial disintermediation aslo changes the enterprises’ financing way which is rely on bank loans, enhancing the interest rate elasticity of investment spending. That is, by the influence of financial disintermediation, the two links of interest rate transmission mechanism have become more smoothly; Financial disintermediation enhances Tobin Q effect, wealth effect, the liquidity effect, the balance sheet effect, and enhance the effect of asset price transmission mechanism; Financial disintermediation changed the mode of enterprises’ finance which is rely on bank loans, and weakened the monetary policy credit transmission effect. On the basis of theoretical analysis, in order to more clearly reflect the influence of financial disintermediation, this paper respectively carried out an empirical test on the influence of financial disintermediation on every links of the monetary policy transmission mechanism. We establish vector autoregressive(VAR) model respectively in two periods: non financial disintermediation period and financial disintermediation period, through the impulse response function and variance decomposition analysis, we draw the conclusion: during financial disintermediation period, interest rate transmission mechanism and asset price transmission mechanism of monetary policy become more smoothly, but the effect of credit transmission monetary mechanism of monetary policy is reduced.In order to further study the influence of financial disintermediation on the three monetary policy transmission mechanism, this paper introduces a nonlinear time series model—smooth transition vector autoregressive(STVAR) model. Compared with other nonlinear time series model, the STVAR model can make a smooth or gradual change between two extreme mechanisms, therefore most easily be used to simulate the economic reality and the sudden economic policy. Through the STVAR model, this paper further validates that China’s financial disintermediation phenomenon appeared in 2005, at the same time, nonlinear test also confirmed that the effects of interest rate transmission mechanism, asset price transmission mechanism and credit transmission mechanism are asymmetric under non financial disintermediation period and financial disintermediation period. Finally, through the generalized impulse response function(GRIF), we get the conclusion: financial disintermediation strengthening the effect of interest rate and asset price transmission mechanism of monetary policy, but weakened the effect of credit transmission mechanism of monetary policy.Therefore, with the further deepening of financial disintermediation, our government should fully consider the impact on the monetary policy transmission mechanism of financial disintermediation, choose a more effective monetary policy intermediary goal and monetary policy tools, and accelerate the marketization of interest rates and the establishment of deposit insurance system, pay attention to credit total quantity control and adjust credit structure at the same time, further standardize the development of the capital market, in order to play the role of monetary policy in the regulation of the real economy better.