The Research On The Risk-taking Channel Of Monetary Policy Basing On The Banking Governess

After the outbreak of the financial crisis in 2008, the research on risk-taking channel of monetary policy was presented and scholars found that the reason of this financial crisis was the long-term low interest rate environment in some countries. Generally speaking, the long-term low interest rates would reduce the capital cost of banks and banks may increase the expectations in business conditions. Considering the increasing fierce competition among banks, banks would lower the standards of the credit, increase their tolerance to subprime borrowers and then improve their risk-taking behavior, leading to the accumulating of banking risks and financial crisis without the effective regulatory of their government. When it comes to China, our current economic growth is also in the downstream and PBC has the tendency to lower the interest rate as well. Because the risk-taking channel of monetary policy inevitably exists in our country and different banks would take different measures on the changing monetary policy environment, so we should strengthen the research on this monetary policy transmission path in order to improve the effectiveness of our monetary policy.This paper analyzed the banks impact of monetary policy considering the different bank-governance characters, subdivided the monetary policy transmission channels, summarized five kinds of risk-taking path(such as income valuation effect, the expected effects, earnings chase effect, communication and feedback effects and leverage effect), then analyzed the bank governance and bank risk-taking behavior according to the ownership structure, board size, independence of directors and executive pays.Secondly, in this paper I analyzed the evolution of Chinese bank governance and monetary policy. Our listed commercial banks are in the tendency of high degree of concentration as well as the more independent in board, executive compensation is also increasing; also I divided our banks into state-owned banks, nationwide joint-stock banks and urban commercial banks aiming at the analysis of their differences in banking governess. Chinese monetary policy started from scratch, shifted from direct control to macro-prudence, and currently developing to the orientation of differentiation and structuralization.Thirdly, this paper utilized 75 commercial banks’ data to verify their risk-taking behavior based on the difference in the banking governess characters during 2002-2014; on the other hand I use VAR model and data from 2003 to 2015 to analyze the risk-taking channel of monetary policy in dynamic way. The results show that: the risk-taking channel of monetary policy in our country do exist; the larger the size of the board of directors and the more independent of board, the high tendency of banks’ risk-taking behavior they will have, so as to the state-owned banks and the nationwide joint-stock banks; in the situation of the more independent of board, the higher proportion of the largest shareholder and the more dispersed equity, bank governance are more sensitive to monetary policy; the effect of risk-taking channel of monetary policy is not obvious in short-term and in long-term this channel would undermine the effectiveness of monetary policy.Finally, this paper gives some suggests on the development of our monetary policy. Our government should practice the macro-prudential regulatory framework, monetary policy of structural reform and the differentiated monetary policies.