Research On Macro-liquidity Transmission Mechanism And Its Regulation From The Perspective Of Financial Friction

Macro-liquidity is not only the blood of the entire economic system but also the most direct driving force at the “Minsky Moment” of a financial cycle.The speedy development of new financial format dramatically broadens the coverage and the operational boundary of the financial system.A more developed financial system is characterized by a more stable self-regulatory mechanism of liquidity.However,liquidity pressure withstood by this system is also much greater than less developed financial systems.In the review of the global financial crisis in the last decade,in the development of economy and finance in different countries,the macro-liquidity transmission mechanism towards the real economy is blocked,which is still the significant root for the systematic financial risk.As economic growth steps into the new normal phase,the real economy enters the new period of energy transformation,and structure adjustment under the pressure of an increase in inventories,leverage ratio and cost.In this key period,how economic policies effectively improve the macro-liquidity transmission mechanism go into effect and how to cope with the problems brought by financial friction are critical.In the modern credit system,macro liquidity is no longer transmitted through a single market or a single chain,but spreads across sectors,markets and economies.Efficient transmission mechanism relies on resource allocation modes established by the participants of the system.Combined with the current situation of China’s financial market,this paper establishes various mathematical models without taking complete information and effective market hypothesis into consideration,and focuses on the research of credit rationing mechanism and cross-border investment mechanism of macro liquidity transmission from the perspective of financial friction.In addition,this paper also systematically demonstrated the dynamic impact of financial friction in the face of external shocks.On this basis,it analyzed and compared the impact mechanism and policy effect of different macro-liquidity control policies,which will prevent the regulatory policies from slipping into the vicious circle that “strict policies impede the progress of market participants;slack policies disorder the market”.It is also beneficial to prevent the long-term accumulation of liquidity from going beyond the enduring ability of the system,which can fundamentally curb the systematic financial risks.The developing trend of modern macroeconomic theory is to establish a more perfect micro-foundation.The research progress on macro liquidity transmission mechanism also follows the trend of micro-development.Chapter 2 systematically reviews the literatures of some representative scholars on financial friction,macro-liquidity transmission mechanism and its regulatory policies,focus on the analysis of research content and results of different literatures.On the basis of previous research results,chapter 3 systematically differentiates the connotation of macro-liquidity,sources and effect of financial friction,as well as influencing factors of macro-liquidity transmission to the real economy.Chapter 4 takes the investment and financing decision and capital accumulation process of bank-related financial institutions and manufacturing enterprises as the micro-foundation of the macro liquidity transmission mechanism.The Heckman selection model and three-dimensional panel data model are used to analyze the influence of financial friction on the capital accumulation of enterprises.Chapter 5 introduces cross-border liquidity into the analytical framework of the transmission mechanism to impact the heterogeneous participants in the industry by trade term and financial friction.Panel threshold model(PTR)is adopted to clarify the influencing factors of the changes in the scale and structure of international liquidity and its threshold effect,explore how financial frictions deeply transform the industrial structure of economic entities,trade direction and the direction of international capital flow.Subsequently,against the backdrop of increasing global financial market fluctuation and cross-border capital flow instability.Chapter 6 introduces financial friction factor into the framework of macro liquidity regulation policy and then analyzes the relevant exchange rate policy effect,price monetary policy effect and balance sheet policy effect of actual macro liquidity regulation,based on credit rationing mechanism and cross-border investment mechanism.The panel vector autoregressive model(P-VAR)is adopted to investigate the effect of macro liquidity regulation related to exchange rate policy,monetary policy effect and the central bank balance sheet policy effect,which reveals the dynamic impact of external shocks on macro liquidity and the evolution and diffusion mechanism of different types of regulatory policies from the perspective of financial friction.Chapter 7 draws on the international experience of macro-liquidity regulation of various countries and combined with China’s recent financial reform practice,analyzes the transformation path of macro liquidity management in the process of financial liberalization,provides necessary information and policy suggestions for policymakers in aspects of coordination between financial reform and regulation policy and the macro-prudential management framework to ensure no systematic risks in China’s financial system and realize optimized allocation of financial resources.Based on substantial theoretical and empirical analyses,the main research conclusions are as follows.(1)The transmission mechanism of macro liquidity towards the real economy becomes increasingly diversified and structured.Macro-liquidity from different perspectives and different levels plays a significant role in the formation and allocation of the capital of economic entities through the market interest rate,cross border investment and financial institutions’ balance sheet.(2)The key to clear the obstacles in the macro liquidity transmission mechanism is to tackle the financial frictions in supply and demand matching of macro liquidity.Not only the aggregate liquidity regulation policies need to be re-examined,but also such problems as financial structural reform,financial infrastructure construction,and capital constraint mechanism for commercial banks,which have become the most important micro-foundation tasks in the construction of an effective liquidity transmission mechanism in the long run.(3)According to the credit rationing mechanism of macro liquidity transmission,in the joint influence of adverse selection and limited guaranty,which are two kinds of financial friction,the credit market has not only seen a decline of equilibrium interest rate but also attracted some low-productivity enterprises which cannot expand the investment in the original equilibrium state.Thus,there is a sharp decline in the quality of financing projects compared with the quality in friction-free credit market environment,which changes the demand for macro liquidity and the path of capital accumulation.(4)The obstacles in macro liquidity transmission always originate from the result of the mutual effect of market participants when they cope with liquidity shocks.Credit market distortion caused by financial friction results in that the guarantee of tangible assets not only goes beyond enterprises’ solvency but also makes enterprises attach more importance to assets growth rather than solvency improvement,which may be the primary cause of numerous “large but not strong” enterprises in China.(5)The transmission of macro liquidity in the world impacts on different participants in the industry by trade term and financial friction.Financial constraint caused by such financial friction profoundly change the industrial structure of economic entities,trade direction and the direction of international capital flow.Meanwhile,this heterogeneity has a specific threshold effect and interval features.(6)It is difficult to relieve the market distortion caused by financial frictions by traditional monetary policy instruments.Macro liquidity regulatory instrument is a breakthrough and innovation of the traditional monetary policy.Instrument design has a more balanced,milder and gentler regulatory impact on economic variables,which can effectively solve the structural problems in the financial system.