Research On The Validity Of The Lender Of Last Resort In China

After the outbreak of the subprime mortgage crisis,the main central banks,represented by the Federal Reserve,began to exercise the responsibility of the lender of last resort to provide liquidity for the whole financial market and avoid the liquidity crisis.In this crisis,the Fed has injected a large amount of liquidity into the market by means of expanding the loan target,reducing the interest rate,the quality requirements of the collateral and the innovative financial instruments,all of which have played an important role in the governance of the crisis.At home,the central bank's lender of last resort has little effect on its own economic transformation system and the unsound legal system of the lender of last resort.Therefore,it is of great significance to explore how to improve the effectiveness of our lender of last resort and make it serve the modern financial market better.This paper,through the combination of theoretical analysis and empirical analysis,focuses on the effectiveness of the implementation of the lender of last resort system in the people's Bank of China since 90s twentieth Century,and puts forward constructive suggestions for the lender of last resort in China.First of all,we comb the related research viewpoints at home and abroad,and have a detailed understanding of the theoretical basis and empirical method of the lender of last resort's effectiveness.Secondly,the validity of the lender of last resort is discussed and established from the angle of cost and benefit,including the definition of the validity of the lender of last resort,the standard of measurement and the method of empirical test,which provides a theoretical basis for the analysis of the latter.Third,summarizes and summarizes the current legislation and practice of the lender of last resort in China,and summarizes the practice of lender of last resort in China.Fourth,according to the theory of effectiveness and the reality of our country,we choose a representative index to build a vector autoregressive model.Through cointegration test,impulse response analysis and variance decomposition,the effectiveness of the lender of last resort system is empirically tested.The result shows that our lender of last resort is not effective enough.Fifth,according to the operation characteristics and empirical test results of the lender of last resort system,we analyze the reasons that affect the effectiveness of lender of last resort in China.Finally,according to the theoretical analysis and the results of the empirical test,we put forward the policy suggestions to improve the effectiveness of the lender of last resort system in China,including strengthening the independence of the central bank,reducing the moral risk of a single institution,and accelerating the innovation of a variety of aid tools.