Monetary Policy Transmission Mechanism

Ⅰ.The purpose and significance of this paperThe paper empirically studies the creditworthy channel and interest rate channel of monetary policy.Why the topic is chosen?With the development of financial reform, a great change has happened in monetary policy in China .In the early 1998,limitation on the scale of loan was canceled , which indicates the transformation of transmission mechanism of monetary policy from direct regulation to indirect regulation .The transformation of transmission mechanism of monetary policy raises the following problems :What has happened in the transmission mechanism of monetary policy ?Does the transmission mechanism woke ?Though studies about interest rate channel and creditworthy channel of monetary policy have been done ,empirical analysis for the above problems is of great significance.Ⅱ.Outline and logic structure:According to the general theory of transmission mechanism of monetary policy, this paper studies the creditworthy channel and interest rate channel and it is divided into four chapters .When it comes to the creditworthy channel ,the effectiveness of the creditworthy before and after 1998 is separately examined .As for the interest rate channel ,the effectiveness of the interest rate channel transmission in the monetary market and the capital market ,and the effect of interest rate on the real economy is also examined .Some advices are put forward in the last chapter .Ⅲ.Content and viewpoint This paper is divided into four chapters Chapter One mainly introduces the general theories on the transmission mechanism of monetary policy established by western economists and the evolution of monetary policy in China .This chapter contains three parts .The first part is a brief introduction for the transmission mechanism of the effect of changes in asset structure and wealth and the effect of possibility of credit supply .The second part mainly introduces the latest development of theories on monetary policy ,the focus is theories on the transmission mechanism of creditworthy channel and cost channel .The last part gives a brief introduction for several development stages of transmission mechanism of monetary policy in China .Chapter Two is an empirical analysis of transmission mechanism of loan ratio , which is covered by three parts .The first part answers the question of why the loan ration was once reasonable in China and reveal the drawbacks of loan ration .In the second part ,empirical analysis leads to the conclusion that the creditworthy channel did work before 1998 .The third part empirically analyses equilibrium loan and draws a conclusion that the transmission of monetary supply is effective .Chapter Three focuses on the interest rate channel .The empirical analysis indicates that the interest rate has significant effect on the monetary market , but do not have significant effect on the capital market .The effect of interest rate on real economy is also examined .At present time ,changes in the interest rate do not have significant effect on real economy .Changes in the interest rate of deposit have significant effect on the deposit ,but the effect of changes in interest rate of loan is not significant .Chapter Four consists of two parts .The first part mainly examines the major factors that impede the transmission mechanism of monetary policy .The second part presents some advices .Ⅳ.The contribution of this paperCompared with the existing literatures about the transmission mechanism of monetary policy in China ,this paper emphasizes three aspects .Firstly , this paper not only introduces creditworthy channel and interest channel of monetary policy ,but also introduces the cost channel .Secondly , though the loan ratio was cancelled in 1998,which indicates the transformation of transmission mechanism of monetary policy from direct regulation to indirect regulation ,the effect of creditworthy channel can not be neglected .So this paper conducts empirical analysis of both the creditworthy channel and interest rate...