The Effectiveness Of Monetary Policy Effects Of Commercial Banks Conduct

Monetary policy is one of the important measures that government chooses to regulate the macro economy. Its validity is vital to the economic development. It hasn't been a long time since we began to implement monetary policy.So many institutions in our country were not perfect as that in the developed countries.The central bank should consider the commercial banks'response to the monetary policy when formulates and implements monetary policies in order to manipulate macro economy. Due to its special position and role, the commercial bank plays an imptant role in the overall development. Its changes in conduction may affect the validity of the monetary policy from different sides.Commercial banks are major agencies in the process of implementing monetary policy,and are very important in monetary transmission, with whether their conductions keep pace with the central bank's monetary policy will decide monetary policy's effectiveness. In terms of goals, monetary policies mainly consider the overall economic growth and stabilization of price. But the commercial bank as an economic entity aims at maximizing profits,income is their first target. The differences in their targets lead to the result that the commercial banks will never follow the monetary policy passively to adjust conductions.Sometimes in order to achieve maximal profits, commercial banks may take some actions to evade the loss brought from the monetary policy.Their actions on one hand can increase profits, but on the other hand might affect the practice of the monetary policy,distort transmission mechanism and reduce its effectiveness. So it is necessary to analyse the relationship between the characteristics of commercial banks and the effectiveness of monetary policy.Particularly,our financial markets are not perfect, when the indirect financing is almost the only channel of financing,economic development relys on commercial banks largely.The conduction of the commercial banks become the important effectiveness factor of the monetary policy.This paper proceeded from actual conditions in our country,studied commercial banks'conduct,analysed the influences of characters of the commercial banks for monetary policy.At last, we proposed some suggestions to enhance the effectiveness of the monetary policy.This article mainly divided into three parts.In the first part,we represented the theory about the monetary policy.In conclusion, monetary policy plays an important role in macro-control,in order to exert the effectiveness of the-monetary policy,all the subjects who manipulate the policy need to work closely.The second part is the core of this article.It chose five typical actions of the commercial banks as the objects of the study.We analysed their effect on the effectiveness of the monetary policy by theoretical analysis,qualitative anlysis,empirical analyses. The IS-LM model was used to analyse the credit ration.The result is that, credit ration in varying degrees has different impact on the monetary policy.It is verified that the existence of the transference of commercial banks' internal funds price shorten the effectiveness of the monetary policy in the certain extent by a model.The paper analyses the influence of excessive reserve funds, price fixing of saving and credit,performance evaluations and financial innovation for monetary policy using theories and empirical analyses.Finally,we got that,the conduct of the commercial bank have effect on effectiveness of the monetary policies.The central bank should consider the behavior characteristics of the commercial bank. In the third section,we mainly retrospected china's monetary policy operating in the last ten years and analyzed the trend of the monetary policy in the current economic situation.Then,combined with commercial banks'conduct we throwed out a few suggestions on enhancing the effectiveness of the monetary policy.