The Influence Of Financial Disintermediation On Transmission Mechanism Of Monetary Policy

In past 30 years of China's Reform and Opening, as the financial system changed dramatically and the capital market developed rapidly, there was a growing trend of financial disintermediation in financial system. Moreover, capital flowed between the commercial banking system and capital market repeatedly which show that the financial disintermediation will be a tortuous and long-term process. On the one hand, disintermediation is a inevitable result which has been caused by development of capital market and economic entities' self-selection and has some laws. On the other hand, because of particularity of economic environment, disintermediation in China's is not fully consistent with that in western developed. At the macro-level, disintermediation influenced on monetary policy instrument, the intermediate goals, the ultimate goals and monetary policy transmission channels , what's more, disintermediation will cause further development of capital markets and market-oriented interest rates; At the micro-level, disintermediation poses challenges for traditional commercial banks, at the same time, brings in new opportunities and development space for them; Majority of existed research focused on positive and negative influences that disintermediation impacts on commercial banks, as well as how commercial banks to deal with disintermediation and adjust business strategy. However, few papers study how disintermediation affect monetary policy transmission, and how monetary authority adapt to disintermediation and improve the effectiveness of monetary policy in our country with a macro-perspective. In view of this, this article focuses on transmission mechanism of monetary policy, as well as selection of monetary policy instruments, intermediate targets and the ultimate goals under the condition of disintermediation. What's more, this article will offer proposal to enhance the effectiveness of monetary policy in the end.