Research On The Coordination Between Monetary Policy And Macroprudential Policy

All countries have broadly strengthened the interation between monetary policy and macroprudential policy,but there is a debat while implementing monetary policy and macroprudential policy with more effective coordination, especially for the specific performance of coordination in the microeconomic entity level does not seem to have in-depth discussion. This dissertation, from the perspective of expectation management,has combined the characteristics and main goals of monetary policy and macro-prudential policy, and tried to put forward several closely related issues from the microeconomic entity level, and deduced the whole framework. Finally, the end has laid on how to achieve the coordination between monetary policy and macroprudential policy.The first question is about the impact of monetary policy adjustment on corporate financing constraint and the coordination effect with macroprudential policy .Different from the total control of monetary policy and the characteristics of procyclical regulation,the macroprudential policy emphasizes the structural adjustment and countercyclical regulation. Therefore, the coordination between monetary policy and macroprudential policy performs in the corporate finance level is reflected as the coordination between the total control and structural control, and that between the procyclical regulation and the countercyclical regulation. This dissertation analyzes the impact of monetary policy adjustment on corporate financing constraint, and the coordination between monetary policy and macroprudential policy in alleviating corporate financing constraint, using data from Chinese Listing Corporation. The results show that investment cash flow sensitivity is higher for corporation with non-state-owned nature, smaller size and lower regional financial development, and the effect of loose monetary policy to ease financing constraint of these corporations is more obvious. While the scale of monetary policy becomes smaller, the direction of monetary policy turns to tighten, or the economy enters into the downward cycle, the mitigation effect of monetary policy on corporate financing constraint tends to weaken.Further investigation demonstrates that macroprudential policy will strengthen the mitigation effect of monetary policy on these corporations and reduce the adverse effect of monetary policy while experiencing these types of monetary policy asymmetry. This dissertation concludes that monetary policy and macroprudential policy can play a coordinating role to ease the structural financing constraint, and screed the effect of monetary policy asymmetry while easing financing constraint caused by monetary policy.The second question is about the impact of monetary policy stance on bank risk and the coordination effect with macroprudential policy. Unlike the price stabilization function of monetary policy, macroprudential policy focuses on financial stability.Therefore, the coordination between monetary policy and macroprudential policy performs in the financial risk level is refleced as the coordination between price stability and financial stability. This dissertation analyzes the impact of monetary policy stance on bank risk taking and makes an empirical study on the coordinating effect between monetary policy and macroprudential policy in the framework of risk taking channel of monetary policy, using the data from Chinese commercial bank. The results indicate that accommodative monetary policy stance will increase bank risk taking, and banks with smaller asset size, lower capital ratio or poorer liquidity will take higher risk and are more sensitive to monetary policy stance. Further study shows that the strengthening of macroprudential management will help to reduce bank risk, weaken the impact of monetary policy stance on bank risk taking, and the effect of monetary policy stance on bank risk taking will decreases more significantly for banks with smaller asset size or lower capital ratio. This dissertation concludes that the macroprudential policy will reduce bank risk taking, and weaken the impact of monetary policy stance on bank risk,and the effect is different due to different scale of bank assets and the proportion of capital.The third question is about the impact of monetary policy tool on bank credit growth and the coordination effect with macroprudential policy. Different from the characteristics of the procyclical adjustment of monetary policy, the macroprudential policy emphasizes the countercyclical management. Therefore, the coordination between monetary policy and macroprudential policy performs in the bank credit level is reflected as the coordination between the procyclical adjustment and countercyclical management. This dissertation analyzes the effect of monetary policy tool on bank credit growth and makes an empirical study on the coordinating effect between monetary policy and macroprudential policy in the framework of bank lending channel of monetary policy, using the data from Chinese commercial bank. The results indicate that accommodative monetary policy will increase bank credit, and bank credit for banks with smaller asset size, lower capital ratio or poorer liquidity are more sensitive to monetary policy shocks. Further study shows that the strengthening of macroprudential policy will help to weaken the effect of monetary policy tool on bank credit and the effect of monetary policy tool on bank credit will decreases more significantly for banks with smaller asset size, lower capital ratio or poorer liquidity.This dissertation argues that macroprudential policy will significantly reduce bank credit growth, and weaken the effect of monetary policy on bank credit growth, and the effect is different due to different scale of bank assets, capital ratio and liquidity.Finally,this dissertation,from three dimensions, namely policy objectives, policy tools and policy mechanisms, makes a further discuss on coordination between monetary policy and macroprudential policy, including the general understanding of the objective coordination, classification study of tool coordination, and mechanism coordination of institutional model. It concludes that, in order to strengthen coordination between monetary policy and macroprudential policy in China, the authorities should focus on four issues, including the financial capital turns away from real to virtual field,credit concentration and contradiction between credit supply and demand, the effectiveness of financial regulatory framework, and the effectiveness of macrocontrol framework; stressed four ideas, namely, Institutional arrangements should be scientific and effective,policy should be unified and orderly, policy framework should be systematic and perfect, and policy coordination should be combined without distinction;highlight four points, namely to discipline independent use of strong powers,compensate for separation of decisions from control over instruments, address the risk of delayed action, and address lack of cooperation in risk assessment and mitigation;grasp the four directions, namely to strengthen monetary policy transformation, build macroprudential management system, strengthen the central bank communication, and strengthen and improve the market expectation management.The main innovation of this dissertation lies in:First of all, this dissertation discusses the effect of monetary policy adjustment on corporate financing constraint and the coordination effect with macroprudential policy.It has combined the impact of monetary policy on corporate financing constraint with monetary policy asymmetry, and put forward early that macroprudential policy plays an important role in alleviating the financing constraint. It has analyzed both the coordination effect between monetary policy and macroprudential policy in alleviating the structural financing constraint, and the coordination effect in smoothing the effect of monetary policy asymmetry while easing corporate financing constraint caused by monetary policy.Secondly, this dissertation discusses the effect of monetary policy stance on risk taking and the coordination effect with macroprudential policy. In the framework of risk taking channels, it has made a comprehensive identification of the monetary policy stance with the narrative description, and analyzed the impact of monetary policy stance on bank risk and the heterogeneity due to different bank characteristics. It has explicitly introduced macroprudential policy into the empirical analysis of the risk taking channel,and focused on the coordination effect betweem monetary policy stance and macroprudential policy in reducing bank risk.Furthermore, this dissertation discusses the impact of monetary policy tool on bank credit growth and the coordination effect with macroprudential policy. It has measured the efficiency of bank credit channel with credit growth-monetary policy sensitivity,and thus answered the question that how monetary policy affects bank credit behavior and how bank balance sheet variables, such as capital, liquidity and size, affect bank credit transmission and monetary policy effectiveness , and focused on the coordination effect between monetary policy and macroprudential policy.