Study On The Impact Of Interbank Business To Monetary Policy Effectiveness With DSGE Model

In recent years, the proportion of bank loans in the total amount of social financing declined gradually, a large scale of social financing was supplied through a new type of interbank business. Even the interbank business of some joint-stock banks matched one-third of their profits. The new type of interbank business has great ability of money creation, also has a strong influence on the level of the social interest. The trends of the interbank business develop bigger and bigger, and the effect of the traditional monetary policy is huge impacted. By the influence of the interbank business impact, the transmission mechanism of monetary policy is being challenged. How to make the transmission mechanism of monetary policy more smoothly(or monetary policy more effective), the central bank need to solve the theoretical and practical urgently.For the current study of interbank is so few that its normative study is less. Some small part of the research is still at the stage of logical reasoning. How to build a standardized model which integrating the interbank sector into the general equilibrium model is becoming an important task for the theorists.What means of interbank business influent monetary policy by? And what kind of monetary policy tools influence the ultimate goal of monetary policy? Starting form this question, the paper analyze the current situation, characteristics, causes and development of the interbank business, and establish a general dynamic equilibrium equation modal which contains 9 department, then give a quantitative analysis of impact of interbank business on monetary policy. We use of two separate models for modeling, solving, and simulate the impact of exogenous shocks, analyze their impact and give advice to the monetary regulatory authorities.This paper makes conclusions and proposes policy advice on the base of the theoretical and model analysis of the interbank business.The main conclusions are as follows: first, the interbank business has become an important channel of money creation, and the funds offered by interbank has become an important part of the total social financing, and the proportion of the funds is continuously improving; interbank interest rate fluctuations on the entire business to play a larger role; second,interbank business will magnify the effect of the price-based monetary policy; third, the interbank business has a small impact on the quantitative monetary policy compare with the price-based monetary policy; fourth, the execution-effect of quantitative monetary policy may not be better than price-based monetary policy.By general equilibrium model we have established, we can find that the interbank business play a deeper role on the execution-effect of the monetary policy. We give the policy advice by combining the models and analyzing the conclusions presented. The main policy recommendations are as follows:The regulator should strengthen the supervision of interbank business which has become an important channel of money creation, and the original monetary policy effect of central bank has been distortion. Its impact on fluctuations of interest rate also weakens the price-based monetary policy. Because the fund offered by interbank is invest into higher-risk sectors which may be subject to the macro-economic policy control, such as real estate and platforms and other departments, this way will make the effect of the original control policies reduced largely.Improve the statistics regulatory framework of central bank reasonably. Interbank leads to money creation which should be gradually incorporated into the statistical amount of money in order to make the overall amount of money in a more accurate measurement. In addition, in the central bank’s regulatory processes, we should implement mostly differentiated monetary policy for different economic sectors.Use price-based monetary policy mostly. In the empirical department of the model, we find that the central bank’s quantitative monetary policy on the impact of the economy ultimately difficult to realize the goal of regulatory authorities had set, but the effect of price-based monetary policy on the economy ultimately is relative better, and some of the main economic variables will be able to towards the target direction by regulatory authorities has set.