Research on the Coordination of Bank Capital Adequacy Ratio and Monetary Policy——Based on panel data of 16 listed commercial banks in China

Abstract

Capital adequacy ratio and monetary policy are important control measures for financial regulatory authorities and monetary authorities, respectively. Whether they can effectively cooperate greatly affects the effectiveness of monetary policy. This article selects the annual data of 16 listed commercial banks in China from 2003 to 2018, and builds a panel regression model to study the impact of capital adequacy ratio on the transmission of monetary policy. The results show that large state-owned commercial banks play a major role in the bank credit channel of monetary policy, and banks with higher capital adequacy ratios are more vulnerable to monetary policy. In addition, the external constraint of the minimum capital adequacy ratio will cause the monetary policy to have a multiplier effect when it is transmitted through credit channels. The multiplier effect of joint-stock commercial banks is much smaller than that of large state-owned banks. Therefore, financial regulatory authorities should fully consider the interference of capital adequacy ratio on monetary policy, strengthen policy coordination, and unblock the transmission mechanism of monetary policy.