Chinese Monetary Policy, The Effect Of Regional Differences In Empirical Research

Since reform and opening to the outside world, GDP has beenmounting up rapidly, and also the living level of the citizens. Along withthe developing, the problem of regional disparate development stands outbecause of different economy bases and levels of marketization indifferent regions. Then comes out the question: what will it be when theeast, the midland and the west are facing the uniform monetary policies?The transmission mechanism of monetary policy is to analyze howthe monetary policy and its instruments affect the real economy throughvarious financial variables. Theoretically, this is not only a subject in thearea of banking and finance but also a main content of monetaryeconomics. The paper tries to demonstrate the different effects of uniformmonetary policy in different regions in terms of transmission mechanismof monetary policy.Major contents and opinions in the paper as follows:1. About the general theories of the transmission mechanism ofmonetary policy. The paper concludes and compares the four maintheories, including the mechanisms of interest rate channel, ofasset-adjustment channel, of money supply channel and of credit supplychannel.2. Based on the theories of the transmission mechanism of monetarypolicy, the paper analyzes the main channel of monetary policytransmission in China. The credit channel became the main channel ofmonetary policy transmission because other channels almost blocked.3. About the regional difference of general factors that affect thetransmission mechanism of credit channel in China. Factors that affect thetransmission effects of monetary policies are revealed through a briefanalysis of the theory concerning the transmission mechanism ofmonetary policy by credit channel and comparisons among differentregions: the distribution and operating efficiency of commercial banksand enterprises;the outstanding proportions of deposits and loans;as wellas the rising rate of investment and GDP.4. The initial cognitive analysis about the different effects of uniformmonetary policy in different regions is done with the statistical methods.The relations between monetary base and credit size, credit size and fixedassets investment, fixed assets investment and GDP, credit size and GDPin respective regions are tested by regressing the data in point using OLS.