Abstract
After financial crisis in 2008, more and more researchers paid attention to not only the expansionary monetary policy but also the relationship between the risk-taking and monetary policy. Borio and Zhu firstly researched on risk-taking channel of monetary policy in 2008. This article firstly reviews some literature about the risk-taking channel of monetary policy, the transmission mechanism and the influencing factors, and then selects the data of 15 representative listed Banks in China from 2007-2016 to do empirical research and draw the following conclusions. First, this article finds evidence that the risk-taking channel of monetary policy is significant in China. Expansionary monetary policy has a positive impact on banks’ risk-taking. Second, macro-economic conditions and the micro characteristics of the bank can influence the transmission of risk-taking channel. Based on that, this article proposes the recommendation that monetary policy should be included in macro-prudential system to strengthen monitoring system of the bank’s risk management. Besides the relationship between counter-cyclical capital regulation and monetary policy control is important.
Highlights
The financial crisis in 2008 caused enormous damage to the global economy reflects the fragility of the modern financial system
This article firstly reviews some literature about the risk-taking channel of monetary policy, the transmission mechanism and the influencing factors, and selects the data of 15 representative listed Banks in China from 2007-2016 to do empirical research and draw the following conclusions
The results show that monetary policy is not neutral, and monetary policy stance has a significant impact on bank risk taking [18] [19]
Summary
The financial crisis in 2008 caused enormous damage to the global economy reflects the fragility of the modern financial system. In the opinion of traditional monetary policy credit channel, monetary policy is completely neutral It does not incorporate financial risk into the model. In addition to the traditional monetary policy tools, China’s central bank has created a variety of monetary policies with industry orientation and structural adjustment function to promote the efficient operation of funds, improve the efficiency of financial operation and the ability to serve the real economy. Such monetary policy tools include SLF, MLF, PSL, etc. After the analysis of the empirical result and current reality of China’s macro-economic, we will put forward corresponding policy recommendations for monetary policy maker and institutional framework of macro-prudential management
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