Research On The Stability Of Short-term Market Interest Rate Under The Mechanism Of Interest Rate Corridor Regulation

With China's economy entering a new normal,financial liberalization is accelerating,financial product innovation is emerging in endlessly,financial products of commercial banks,Internet Finance and asset securitization are developing rapidly,which leads to the difficulty and poor effect of the traditional quantitative monetary policy framework on the regulation of policy interest rate.Therefore,the monetary policy framework is facing the transition from "quantitative" to "price" transformation needs.From the experience of the world's major economies,the core of the price based monetary policy framework is the interest rate corridor system.In 2015,the people's Bank of China established the standing loan facility as the upper limit of the corridor,marking that China has officially started to build the interest rate corridor system.At present,it is of great practical significance to study how to improve the interest rate corridor system and effectively regulate market interest rate under the special financial environment of our country.This paper mainly studies the principle and effect of interest rate corridor system on the regulation of short-term market interest rate volatility.First of all,we review the basic theory of interest rate corridor as the logical starting point,and study the basic elements,operation mechanism,two classifications,potential advantages and the mechanism of action on short-term market interest rate.Then,it combs the development process of interest rate corridor in four foreign developed economies,including the economic background of operation,basic elements,types,width changes and the regulatory effect on benchmark interest rate;on this basis,it further discusses the favorable conditions for the construction of interest rate corridor in China and the preliminarily formed interest rate corridor system.Finally,the empirical model is used to test the effect of the short-term market interest rate volatility.The conclusions are as follows: first,through the GARCH model test,it is found that there is GARCH effect in benchmark interest rate research samples after and before the implementation of interest rate corridors in various countries;the benchmark interest rate after the implementation is less than before in the maximum,median,average and standard deviation.Second,using the virtual variable regression model,the implementation of the interest rate corridor as a virtual variable,to test that it has a significant negative impact on the short-term market interest rate volatility;when the corridor is implemented,the overnight benchmark interest rate volatility in China and the United Kingdom has significantly reduced by 0.0075 and 0.0026 units.These empirical results show that the implementation of interest rate corridor has played a restraining role in the fluctuation of benchmark interest rate and stabilized the short-term market interest rate.At the end of this paper,combined with the above theoretical analysis and empirical test results,some suggestions are put forward to improve the construction of interest rate corridor system in China: the basic elements of interest rate corridor should create more suitable monetary policy tools;the system of standing loan facility and deposit reserve should learn from the successful experience of foreign countries to further optimize and improve;at the same time,we should continue to promote interest rate integration and improve benchmark interest Rate system,smooth interest rate transmission mechanism.