A Coordinated Study Of Monetary Policy And Macro-prudential Policy In China

Global Financial Crisis has triggered alarm to all the central banks.What we have learned from the crisis is that financial control system,which depends mainly on monetary policy and micro-prudential policy,is not enough to handle systematic financial risk.In this circumstance,numerous countries have adopted macro-prudential tools and policy framework to reduce systematic financial risk and resolve the pro-cyclicality of financial institutions.For the sake of our country,it is really important to testify the effectiveness of macro-prudential policy,thus,to ameliorate the two-polar regulatory framework.This thesis firstly reveals the limitation of monetary policy by analyzing major economic indexes and give a brief introduction to the macro-prudential tools China has adopted recently and the relevant risk.Then it analyzes the effect of monetary policy and macro-prudential tools on the supply of bank credit using the simplified bank balance sheet.This thesis adopts the macro-prudential policy index IMF has constructed as instrumental tool and uses the micro unstable panel data of 81 Chinese commercial banks from 2002 to 2015.It empirically testifies the regulatory effect of the monetary policy and macro-prudential policy on the risk-taking and credit expansion of commercial banks by using system GMM.Also,it analyzes the impact of macro-prudential policy on monetary policy transmission channels.According to the result,monetary policy and macro-prudential policy can both have influence on the risk-taking and credit expansion of the commercial banks and,in reality,the implement of macro-prudential policy counteracts some effect of monetary policy.We cannot achieve both goals,namely,stabilizing the financial risk and facilitating banking credit,when central bank adopts monetary policy and macro-prudential policy separately.Therefore,central bank should strengthen the anti-cyclical effect of macro-prudential policy and use the monetary policy coordinately,thus improve the two-polar regulatory framework in order to achieve macro-economic goals which are preventing financial risks,stabilizing inflation and promoting economic growth at the same time.