Research On The Efficiency Of Monetary Policy Transmission Mechanism Based On The Interest Rate Channel And Credit Channel

In recent years, with changes of the international economic environment,domestic interest rates and financial markets affected by the internationalenvironment are constantly changing. Our government constantly adjusts itsmonetary policy during this period, in order to reducing the negative impact of theinternational environment on Chinas economic environment, making sure that thedevelopment of Chinas economy is in a relatively healthy environment.Monetary policy transmission mechanism is not only the core element of themonetary policy theory, but also an integral part of macroeconomic policy. Monetarypolicy theory can be traced back to the classical quantity theory of money in theearly18th century, officially formed in the1930of the20th century after Keynesianeconomic theory dominating in the economic theory. Monetary policy works throughinterest rates, credit, asset prices and exchange rate transmission channels to achievemacroeconomic goals. Therefore, monetary policy measures work through variouseconomic variables within the economic system, thereby affect the entiresocio-economic activities. In a word, a countrys monetary policy is valid, dependingprimarily on its level of policy tool to achieve their macroeconomic objectives. Thisarticle aims to study effectiveness of interest rate channel and credit channel, so asto study whether the transmission mechanism of monetary policy are valid.This paper is divided into five parts. The first part is Introduction, it introducesthe background of topics, as well as research scholars at home and abroad. Thesecond section describes the paper application to the theory of knowledge; the thirdpart is the theory of the effectiveness of channels of credit and interest rate channel,discovery received blocking the transmission of both channels and not smooth. Theforth part is empirical analysis. Select related data between2001-2012in this article,using the ADF unit root test to test the stability of data finds it non-stationary timeseries data; meanwhile using the Johansen Cointegration test found the creditchannel and interest rates channel are long-term stable; the vector error correctionmodels were developed to work out the optimal lag period of4; and building on the Granger causality test between variable, draw that as one of the monetary policytransmission channel, the credit channel in China is more effective than the interestrate channel, and there is little relative between credit channels and interest ratechannel; finally using impulse response functions finds credit channel conductiondelay is longer than the interest rate channel conduction delay. Combining thesestudies came to this article, we draw that interest rates channel and credit channel ofChinese monetary policy affect the actual economy together, credit channel is themain transmission channel of monetary policy, as well as there is a longer delayprocess conclusion through the credit channel of monetary policy transmission.Empirical shows that credit channel of monetary policy transmission mechanism inChina and interest rate effective in the long term, and there’s lags during thetransmission, which means conduction is blocked, not smooth. Part Five is conclusion,to arrive at the credit channel of Chinese monetary policy and interest rate channelof transmission is not smooth, but also gives the relevant policy recommendations.