Transmission Mechanism and Effectiveness of Monetary Policy on Interest Rate of Informal Finance
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| Title | Transmission Mechanism and Effectiveness of Monetary Policy on Interest Rate of Informal Finance
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| Author | Pan bin，Xie Ping and Jin Wen Wen |
| Organization | Financial Research Institute, Ningbo University; b: School of Wudaokou Financial, Tsinghua Universit;School of Business ,Wenzhou Universit |
| Email | panbin109@163.com；xiep@china-inv.cn；00011096@wzu.edu.cn |
| Key Words | Monetary policy； interest rate of private lending； Intermediary effect；Implementation effect |
| Abstract | The failure in heeding the dual financial structure and the resultant doubletrack inte-rest rate system in China's financial environment will lead to incorrect estimation in producing optimal monetary polices, and thus lowers the efficiency of monetary policies. This paper empir-ically analyzed the mechanism of how monetary policies affect the interest rate of private lend-ing, and further discussed the relevant effect in China's case and their monetray policy implicati-ons. This paper employed a regression analysis model and a mediator effect test procedure, and followed an analysis path of "macro-monetary policy-- change in credit market--adjustment in interest rate in private lending". We found that contractionary monetary policy results in the rise in the interest rate of private lending with different effects from pricetype and quantitytype monetary policy tools; and the required deposit reserve ratio significantly affects the the interest rate of pr-ivate lending, while the interest rate of private lending shows moderate rigidity in terms of nation-al interest rate adjustment. Our research conclusions are that, among the transmission paths of the effects of monetary policies on the interest rate of private lending, the mediator effects of the credit lending rate, the credit size, and the bank rsik are the most significant, which shows that the mediator effects are significantly exerted in credit market through the channels of opportunity cost, asset substitution, and adverse selection. |
| Serial Number | WP1240 |
| Time | 2017-11-17 |
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