Empirical Research On The Relationship Between Chinese Trade Credit And Credit Channel Of Monetary Policy

With the process of the reform of Chinese economy, the operating environment of monetary policy is more complex and the instruments and channel of monetary policy are more diverse. Now the credit channel coexistences with other transmission channels. However, as the reform of SEC has not been completed as well as the development of capital markets is not imperfect, the effectiveness of monetary policy has been influenced to a certain extent. Thus, based on the issue of effectiveness of monetary policy and its transmission channels, scholars have done a great deal of research and achieved some research results.Within the current literature about the credit channel of monetary policy, the scholars analyzed from the macro level, such as the financial markets and institutions, but ignored enterprises, which are the micro basis of macro-economic. At the same time, more and more enterprises use trade credit widely as a form of short-term financing. It is the issue we discuss in this paper that whether the trade credit has weakened the effectiveness of the credit channel of monetary policy.This paper adopted both qualitative analysis and quantitative analysis method. First, based on a large number of literature at home and abroad, we summarized the relationship between trade credit and bank credit and the foreign research about trade credit channel; quantitative research is based on the theory of motivation of trade credit, we established the supply and demand model with monetary policy variables and carried out the empirical analysis with panel model. This paper is divided into five chapters:Chapter One is the introduction of the background, the related theoretical, the empirical research subject and methods and the main innovations and shortages; Chapter Two is the theoretical basis and the review of literature; Chapter Three is the selection and statistical analysis of empirical variables; Chapter Four is the establishment of empirical model, panel data regression and the explanation of regression results; Chapter Five is the relevant policy recommendations. The research about the effectiveness of the credit channel is discussed from the micro-level in this paper. The main innovations are as follows:first, the discussion about the relationship between trade credit and bank credit is from both the supple and demand perspectives; second, this paper introduced the benchmark lending rate of the RMB and deposit reserve rate as the monetary policy variables and used the current and lag value to regress, so we could achieve a comprehensive analysis result; third, during the global financial crisis erupted in 2007, Chinese PBC operated monetary policy frequently to adjust the pace of economic development, so we used the quarterly data for 2007-2008 for further analysis. Empirical findings show that in recent years, with the development of trade credit and bank credit rationing, the credit channel of monetary policy lacked effectiveness to some extent. At the same time, the widely use of trade credit exacerbated the unbalanced credit rationing. The government should implement some measure to improve the unbalance situation as soon as possible.