Research On The Influence Of LPR On The Transmission Efficiency Of Monetary Policy Interest Rate

China’s market-oriented reform of interest rates has reached a critical step.To some extent,the bounds of interest rates have been scrapped,however,the loan interest rates of commercial banks are still inertia anchored to the official benchmark interest rate,which does not meet the new requirements of the monetary policies transition.In August 2019,the central bank carried out LPR mechanism reform,and the quotation method reflects the market-oriented characteristics,effectively guiding the decline of real loan interest rate.LPR responds to the twosector pricing mechanism within the bank by anchoring the medium-term policy interest rate MLF,and has outstanding advantages in transmitting policy signals.In this paper,LPR is defined as a quotation mechanism.Compared with the way of relying on benchmark interest rate pricing in the past,the marketization characteristics embodied in LPR mechanism change the transmission mode and transmission efficiency of interest rate.This paper aims to study the impact of LPR on the conduction efficiency of monetary policy,especially the monetary policy interest rate.Firstly,it elaborates the contexts and importance of this thesis,outlining the catalogue,techniques and innovative points as well.Secondly,after introducing the relevant theories and concepts,it analyses the implementation background,principle and effect of the application of LPR mechanism.At the level of theoretical mechanism,the article highlights the changes of the conduction path of monetary policy interest rates before and after the implementation of LPR,and how it affects the conduction efficiency.In order to empirically test the impact of LPR on this topic,the qualitative analysis of Granger causality test,panel analysis and TVP-VAR quantitative analysis are carried out.Finally,it sums up the findings of this article,based on which bringing forth proposals.The major conclusions of this thesis are as follows: in terms of the transmission to the interest rate of loans,the test of macro data found that before the LPR reform,the loan benchmark interest rate was the main influencing factor of loan interest rate,and after the reform,the market interest rate also became an important influencing factor;The test of micro data shows that after the LPR reform,the transmission from market interest rate to bank loan interest rate has witnessed efficiency improvement,which is more notable in state-owned banks.In terms of the real economy,after the operation of LPR mechanism,the market interest rate transmits to the real economy variable CPI and industrial added value growth rate more efficiently,and the role of benchmark interest rate is weakened,but it is still strong.This shows that after the LPR reform,the marketization of interest rate has been further realized in terms of interest rate transmission,which has effectively weakened the impact of the official benchmark interest rate,but it also needs to gain more enhancement and promotion.The innovative work of this paper is as follows: most of the existing studies focus on the impact of interest rate marketization on the transmission efficiency of monetary policy,while LPR,as a key step of interest rate marketization,has not been implemented for a long time.The relevant literature focuses on the theoretical mechanism of LPR operation,and the empirical research mostly focuses on the effect on the real economy.Based on theoretical assessment and empirical examination,this paper hopes to analyze the changes of monetary policy interest rate transmission before and after the implementation of LPR,qualitatively and quantitatively analyzes the role of the implementation of LPR mechanism in the transmission process from monetary policy interest rate to loan interest rate,bringing forth suggestions to further improve the transmission efficiency of policy interest rate in China.