The Research On The Relation Between The Aggregate Financing To The Real Economy And The Money Supply In China

In recent years,with the rapid expansion of Chinese total financial volume,the diversification of financial structure,increasing innovation in financial products and financing tools,more support to the real economy from securities and insurance institutions,the rapid rise of the trust market and the folk capital,the complicated and changeable international economic and financial situation,the new RMB loan can not fully reflect the relation between the finance and the economy and the policy-oriented position of the money supply is gradually decreasing.After the latest international financial crisis,the major countries realize that information deficiencies and institutional deficiencies in financial statistics are important causes of the crisis.In order to improve the effectiveness of policies and maintain financial stability,the central banks actively improve the financial statistical framework and broaden the coverage of financial statistics and data access channels.The current international financial statistics are forming five new priorities,that is,pay more attention to other financial companies’statistics,pay more attention to the total credit and structural data monitoring,pay more attention to incremental data,pay more attention to the data of systemically importance financial institution,and pay more attention to the total liquidity.In December 2010,Premier Wen Jiabao first put forward the concept of "the aggregate financing to the real economy(AFRE)",and pointed out to maintain a reasonable AFRE.In the following year the PBC published figures of AFRE,which all walks of life gradually began to pay attention to.In August 2013,the PBC introduced AFRE at the international conference of BIS about the monitoring and evaluation of changes in the financial system after the crisis in Shenzhen,which commended by the international community and the participating experts.In the 2016 government work report,Premier Li Keqiang proposed two 13%goals for the first time in the regulation of monetary policy,that is,the expected 13%increase in the generalized money supply and 13%increase in AFRE.By reviewing the past few years of the government work report,that is the first time China government put forward the growth control objectives of AFRE.In the 2017 government work report,the expected goals of the generalized money supply and AFRE are reduced to 12%.From this point AFRE has been officially recognized and began to play an important role in the field of monetary policy.At present,there is a lot of dispute theoretically about whether AFRE can substitute the money supply or not.Supporters believe that AFRE can completely replace the money supply and become the new monetary policy intermediary target.However opponents think that as a monetary policy intermediary goal the money supply is already very mature and AFRE is totally superfluous.I would like to solve the above controversy through the comparative reseach between AFRE and the money supply.The paper traces the theoretical basis of AFRE and the money supply based on the the monetary policy transmission mechanism.AFRE and the money supply are the practice of credit view and monetary view of the the monetary policy transmission mechanism in China.Based on the total amount,structure and evolution of AFRE and the money supply,this paper elaborates the background,the definition and the characteristics of AFRE and then deep into the financing structure to study the interaction mechanism between AFRE and the money supply.Combining with the results of the previous theoretical analysis,this paper uses a large amount of data to analyze the relation between AFRE and the money supply and their effect in the whole process of monetary policy transmission mechanism by the VAR and VEC model,the Johansen cointegration test,the Granger causality test,the impulse response and the variance decomposition.The empirical research shows that AFRE can be effectively influenced by the monetary policy,it helps to promote economic growth and maintain price stability,its influence degree is far greater than the money supply’s in the monetary policy transmission mechanism,and it reflects the financing situation of the real economy from multiple perspectives and the relation between the finance and the economy.The policy effect of the money supply has been weakened by the changes of the social financing structure,but still has its advantages and can’t be replaced by AFRE currently.AFRE should be a good complement of the money supply.Both of them complement each other and can be the main intermediate target of the monetary policy together.And on this basis the paper put forward relevant policy recommendations.In this paper I use the comparative analysis method,the analytic hierarchy process,the method of combining quantitative analysis with qualitative analysis and combining theoretical analysis with practical operation.The innovation of this paper lies in four aspects.Firstly,there is little research on the relation between AFRE and the money supply.This paper makes up for the research deficiency in this field.Secondly,the research on AFRE and the money supply is not limited to themself,but rather to expand to the whole process of the monetary policy transmission,including the operation target,the intermediate target and the ultimate goal.The paper systematically compares AFRE with the money supply in the conduction process from the finance to the economy.Thirdly,this article illuminates the theoretical basis of AFRE and the money supply and conducts a comprehensive and in-depth comparative analysis from the theoretical basis to the real data.Finally the abundant empirical research variables reflect the combination of quantity and price.At present,it affects the objectivity of this essay to a certain extent due to the lack of some data.There is no detailed analysis about the impact of financial innovation on AFRE and a slight lack of interoperability and pertinence in recommendations.In the end,in view of reasonable lengthlimitations the paper does not make a regional empirical analysis on the relation between AFRE and the money supply.The maturity and perfection of AFRE will take a long time to study and test like the money supply.