A Study Of The Influence On Benchmark Interest Rate To The Change Of Credit Supply In China

For a long time, China has been using the deposit reserve ratio and other quantitative tools to regulate macroeconomic. Although it received some success, but also lead to increased price level, excess liquidity and other issues.As China’s market-oriented to further promote, Scholars have gradually found benchmark interest rate can reflect the intent of monetary policy better.In 2012, the central bank announced on the outside "financial sector development and reform," five "plan" clearly,focus on market-based indirect control mechanism,steadily strengthen price leverage rates, exchange rates and other regulatory tools, and gradually promote the quantitative changes in the regulation of the price-based regulation.However, Given the important role of financial institutions in our financial system,what impact of credit supply can be occurred when implement the benchmark interest rate based price-based monetary policy,if price-based monetary policy tools are able to more accurately convey the intention of the monetary authorities and macroeconomic regulation,and whether its transmission channels unobstructed in China.This series of questions are worth further exploration.Firstly, the paper introduces the concept of monetary policy and its instruments,describes the theory of bank credit supply and CC-LM model.Secondly, paper analyzes the relationship between the benchmark interest rate and credit supply with the actual data, and describes the route which financial institutions impact credit supply.Again, this article uses January 2007-2014 December monthly data for the sample period, establishes the VAR model and uses the method of the impulse response and variance analysis for research.The results show that Price-based tool for change in the supply of financial institutions credit has a more positive impact,it can be more smoothly through the credit channel to regulate the supply of credit,but has volatility and time lag in the process of a policy implemented to show the effect.The reason is mainly due to the extent of China’s market economy needs to be improved,financial institutions are lack of the operation and management system,.Therefore, on this basis,the paper make suggestions on strengthening the role of the benchmark interest rate on the credit supply,including laying the foundation of the benchmark interest rate conducting monetary policy, improving financial markets and financial institutions operating system optimization and so on. We hope that through the efforts of the various aspects of making price-based monetary policy tools to play its due role,and provide an effective basis for the central bank policy.