Monetary Policy, Bank Competition And Risk Takin

China is a financial system dominated by commercial banks.Commercial banks provide an important channel for monetary policy to regulate the macro-economy and play an important role in risk transfer in maintaining the stability of the financial system.There are many banks in China.In addition,the rise of Internet Finance and the increasingly convenient capital flow of private enterprises and foreign enterprises have compressed the bank deposit loan spread and intensified the internal competition in the banking industry.To cope with external challenges and internal pressure,China’s central bank flexibly adjusted monetary policy and innovated the monetary toolbox.From 2009 to 2019,the central bank adjusted the deposit reserve ratio 34 times.Overall,the policy orientation of the central bank is to implement loose monetary policy,which makes China’s banking industry face the bank risk-taking channel of monetary policy.Novel coronavirus pneumonia is sweeping the world at present,and China is entering a period of high-quality development.It needs a stable environment to provide financial support for the development.Starting from the channel of bank risk-taking of monetary policy,this discusses the role of loose monetary policy on the level of bank risk-taking;Then,considering the factor of bank competition,this thesis analyzes the impact of bank competition on the change of bank risk level;Finally,taking the bank competition as the regulating variable,this thesis explores how the intensification of competition affects the risk-taking channels of banks.In this thesis,the mechanisms of banks’ risk-taking channels and competition on bank risk are sorted out in turn,and based on the two,the role of competition as a moderating variable on the effect of monetary policy on risk-taking is proposed.Secondly,we compare different measures of bank risk and bank competition,choosing the Z-value for risk measurement and the more popular Lerner index for bank competition measurement.The sample data selection is based on micro data of 39 commercial banks with the observation interval of 2009-2019.The endogeneity problem arising from static panels is effectively solved by building a dynamic panel model with the Systematic Generalized Method of Moments Estimation(System-GMM)method.The empirical evidence is carried out in three steps: first,the impact of the monetary policy stance on the changes in banks’ risk-taking levels is analyzed,with heterogeneity depending on the size of banks,while the impact caused by some micro characteristics is considered.Second,the relationship between bank competition and their risk-taking is examined,using a U-test to determine whether there is a non-linear relationship and,if not,a linear relationship analysis.In the final part,the moderating effect of banking competition on the impact of monetary policy on bank risk-taking is explored,and the test is conducted by introducing a cross product term.The thesis uses STATA software to analyze the above studies.The findings of this thesis are as follows: First,there is a bank risk channel of monetary policy within the Chinese financial market,and an accommodative monetary environment can significantly enhance bank risk,and this effect from accommodative monetary policy is more pronounced among large commercial banks.Second,bank competition is positively related to the level of bank risk,and the relationship between the two is consistent with the competitive vulnerability hypothesis.Third,the moderating effect of bank competition is also present in the effect of monetary policy on bank risk-taking,which means that intense competition among banks will strengthen the effect of monetary policy on bank risk-taking.Based on the findings,this thesis also puts forward corresponding policy recommendations: the use of monetary policy should balance the promotion of growth and financial stability,and pay attention to the potential risks borne by banks under economic growth;pay attention to the effects of the use of different monetary policies,and maintain a moderate degree of flexibility to achieve more accurate regulation;the regulator should pay attention to bank risks,but also encourage individual bank competition for the purpose of improving their own mechanisms,in order to fair supervision Guarantee a good development environment.