Monetary Policy Transmission On Commercial Bank Loan Mechanism Under The Influence Of Banking Governance

Since the late1990s,China’s macroeconomic regulation and control modegradually shift from direct control to indirect control. However, due to the reform ofthe financial system lags behind, the interest rate transmission mechanism is far fromperfect, and the traditional credit transmission channels also appeared a certain degreeof obstruction, an important reason to explain this may be in recent years our countrymonetary policy effect is not an ideal one. The central bank in China pay moreattention to the control of the total credit amount, to optimize the structure of creditand to the management of the supply of credit. This suggests that the means ofadjusting and controlling China’s economy remain to be commercial bank creditmanagement.Financial crisis coming from subprime debt crisis last more than one year fromthe outbreak in2007with the financial turmoil making extensive and rapid impact onevery aspect of the economy. At that time, many big financial institutions had beenbadly battered, dozens of financing options went bankrupt. After the crisis, manyscholars analyzed the cause from macroeconomic policy. They regard the cause ofcrisis as improper continued monetary ease, which increase the risk of financialinstitutions. In other words, monetary policy affects the lending practices and the riskcondition of the bank. Meanwhile, banks of different governance structure choosedifferent behaviors when facing the same policy. The behavior difference triggered bythe differences of banks’ management will ultimately affect the banks’ risk condition.To sum up, commercial banks change the lending practices, their loan amountswith the adjustment of monetary policy. Also, different banks in different governancelevel will make a different reaction adjustment. Just under such a background, bybuilding static model and select data, this paper illustrated the impact of bank governance and monetary policy on bank credit.This article is divided into five chapters, the first chapter is the Introduction ofthe study focused on the background, significance, content and research framework.The second chapter is literature review about theoretical and empirical research. Thethird chapter is the summary of basic theory of conduction mechanism of monetarypolicy and credit transmission channel. The fourth chapter is to analyze measurementresults. And the last chapter summarizes results and revelation of the research.