The Study On The Effectiveness Of Monetary Policy In Informal Finance

China has been in the dual economic system for a long time.The differences between the urban and the rural are huge,and financial efficiency is low.Formal finance has difficulties in meeting the exuberant financial needs of multiple economic subjects.As a result,informal finance has formed and developed rapidly.In fact,informal finance exists not only as a transitional supplement of formal finance,but also as a general and long-term one.However,the existence of informal finance weakens the regulation and control of the economy by the central bank.With the expansion of the scale of informal finance,the liquidity structure and the total amount of money in China have changed greatly.Furthermore,the signal mechanism of benchmark interest rate is distorted,the implementation of monetary policy tools is more complex and unpredictable,and the formulation and implementation of monetary policy are facing new challenges.From the current situation of monetary policy application,China is in an important economic transition period.Monetary policy is faced with the dual task of promoting growth and adjusting the structure,and at the same time,it has multiple objectives such as employment,price and balance of payments.Diversified monetary policy instruments are therefore needed.At present,the main monetary policy instruments adopted in China include deposit reserve ratio,open market business,interest rate,exchange rate,dynamic adjustment mechanism of differential reserve,and so on.It can be divided into two categories: quantitative regulation and price regulation.The quantitative regulation and control adjusts total amount of money supply and directly impacts on the real economy,including deposit reserve ratio,open market operation,reloan and rediscount,etc.Price regulation,by changing the relative price of assets and releasing macro-control signals,affects the behavior expectations of micro-subjects,incentivizes micro-subjects to adjust their own behavior,and thus indirectly affects economic variables,including interest rate,exchange rate and so on.With the increasing complexity of the domestic and international economic situation,the central bank needs to adjust and flexibly use a variety of monetary policy tools to improve the effectiveness of economic regulation.The choice and combination of price and quantity control do not have optimal or universal solution.It should bedetermined according to the level of economic development in different periods,the actual needs of macro-control and the sensitivity of economic subjects to policies.Therefore,the fundamental factor determining the effectiveness of monetory policy lies in whether it meets the current requirements of economic and financial operation and whether it has a positive impact on the main body of the market economy and induces the expected changes of macroeconomic variables,such as output,consumption,investment,price,etc.This paper attempts to integrate informal finance into the credit market and form a unified research framework with formal finance,and then compare the effectiveness of quantitative and price-oriented regulation and control of monetary policy.The paper includes the following four parts:(1)Literature review.This paper reivews and summarizes the recent research of informal finance,and analyzes the existing research results.Through the relevant literature research,the paper summarizes the cause of formation,development process,current situation and impact of informal finance in China from different perspectives.(2)Calculation and analysis.By using monetary and financial statistics and the principle of national economic accounting,the paper calculates the scale of informal finance in China,and obtains the estimated value of informal loans in China.Scale data can more intuitively reflect the importance and impact of informal finance in China,and provide the data basis for the empirical research later.(3)Mechanism analysis.This paper reviews the evolution of monetary policy framework in China,and analyzes the contradictions between the current quantitative monetary policy regulatory framework and the financing structure of our country.On this basis,this paper analyzes the impact of informal finance on China's monetary policy from two aspects of quantitative regulation and price regulation.(4)Empirical analysis.The paper uses the DSGE approach to construct the model from the theoretical point of view,incorporating the informal finance into the credit market and constituting a unified research framework of formal/informal finance,and then compares the effectiveness of quantitative and price-based regulation of monetary policy.TVP-VAR model is used to analyze the time-varying characteristics of the effects of different types of monetary policy on the informal financial market from a practical point of view.