Research On The Impact Of China's Securities Market On Weakening The Credit Channels To Transmit Monetary Policy

Commercial banks remain dominant in China' s financial system, and constitute the main monetary policy transmission mechanism. However, since the late 1990s the stock market gradually expands, more linked with the whole economy, and acts as an indispensible market that provides investing and financing channels for the funds. With the stock market being increasingly important in macro-economy, we should pay more and more attention to it. China' s securities market (especially the stock market) develops rapidly, which has started to change monetary policy transmission mechanism.Based on the theory and empirical results of the western monetary policy transmission mechanism, and in accordance with China' s actual economic operation, we make an empirical analysis. A conclusion is drawn that the effective channel of monetary policy in China should be credit channel .The conclusion is further confirmed by using related data to check the correlation between the total bank loan and GDP. The results indicate that in China the monetary policy comes into effect mainly through the credit channel. However, a weakened transmissibility of the channel has come out as result of the poor risk management in commercial banks and the credit funds flowing into the stock market.Thus, a research is made to study the relationship between the development of the securities market (stock market) and the credit channel of monetary policy mechanism. There are four chapters in this paper. Chapter 1 is the introduction, focusing on the significance, cause, methods, and the status of relevant researches at home and abroad. In Chapter 2, we focus on relevant theories of monetary policy transmission mechanism and its basic status quo in China. Besides, we elaborate the relationship of the development of securities markets and the monetary policy.Chapter 3 focuses on China' s credit channel of monetary policy transmission mechanism. First, we briefly discuss the credit channel of monetary policy transmission mechanism, analyze the theoretical existence of China' s credit channels, in accordance with China' s economic current operation, we make an empirical analysis, find credit channel acts as a weakening trend, then analyze the reasons of it. Chapter 4 is concerned with the view of bank credit funds flowing into the stock market. We demonstrate the impact of China's securities market development on credit channel transmission mechanism.