Transmission Mechanism Of Reserve Requirement Policy And Its Asymmetric Effect

Deposit reserve requirement, a traditional monetary policy instrument that has long been considered not fit to handling the daily fluctuates in monetary condition and somehow outdated are found widely used in many developing countries including china. This controversial phenomenon arise many interesting study on the essentials and effectiveness of Deposit reserve requirement policy and instruments. Meanwhile, the frequently change of Chinese Deposit reserve requirement provide the researchers valuable data to do relevant empirical study. All these are motivation of my paper.This article include seven chapters:In the first chapter, I briefly introduce the writing background and meaning, and present a brief summary of the domestic and foreign literature concerning the effectiveness or function of Deposit reserve requirement policy and the asymmetric effects of this policy, finally I also cite the researching methods. In the second chapter, I begin to analysis the purpose of Deposit reserve requirement policy in historical and contemporary perspective, especially, when dealing with the role of monetary policy instruments, I indentify the different deliver mechanism of Deposit reserve requirement policy,in the last part of this chapter, I construct a particular equilibrium model and give some necessary conditions when the so-called "balance sheet channel of Deposit reserve requirement policy" exists. I employ the VAR and impulse function methods to estimate and test the model using the macro-data from2004Q3to2010Q4and argue that the hypothesized conditions do hold.In the third chapter, I discuss the characteristics of the use of Deposit reserve requirement instruments and the potential reform in china recently. Besides, the necessity of the use is also mentioned. Since the forth chapter, I begin to analyze the asymmetric effects of Deposit reserve requirement policy, in this chapter, I follow the Monti-klein fashion to construct a monopoly model to analyze the behavior of commercial bank, together with some former empirical IO study outcomes, I argue the bank can transfer the Deposit reserve requirement tax burden into the borrower and lender of the bank and the borrower afford larger burden asymmetrically. In the fifth chapter, a Stiglitz and Weiss style asymmetrical information model is established to deal with the inverse choice and moral hazard problem in the circumstance of keeping increase Deposit reserve requirement ratio, in the final part of this chapter I argue that the small business which rely more on bank financing are afford larger burden asymmetrically.In the seven chapter, I briefly discuss some topics on Chinese on-building differentiated Deposit reserve requirement system. Chapter seven is the conclusion...