Monetary stimulus policy in China: The bank credit channel

Min Zhang; Yahong Zhang

doi:10.1016/j.chieco.2022.101825

Monetary stimulus policy in China: The bank credit channel

Min Zhang^*
, Yahong Zhang

^*Corresponding author for this work

School of Economics and Management

University of Windsor

Research output: Contribution to journal › Article › peer-review

5 Scopus citations

Abstract

This paper develops a novel while plausible way to model the Chinese monetary transmission via open market operations (OMOs). In the model, monetary injections through OMOs, together with differentiated collateral regulation in the banking sector, directly affect banks' loan capacities, which then influence sectoral investments and aggregate GDP. The quantitative analysis shows that the 2009–2010 monetary expansion explains nearly 66% of the rise in GDP growth. Moreover, balancing credit allocation across sectors and applying unified banking regulations jointly enhance the GDP growth rate by 1.65 percentage points, with the contribution of the unified banking regulations proving more important.

Original language	English
Article number	101825
Journal	China Economic Review
Volume	74
DOIs	https://doi.org/10.1016/j.chieco.2022.101825
State	Published - Aug 2022

Keywords

Bank credit channel
Chinese economy
Monetary stimulus
Open market operation rule

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10.1016/j.chieco.2022.101825

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title = "Monetary stimulus policy in China: The bank credit channel",

abstract = "This paper develops a novel while plausible way to model the Chinese monetary transmission via open market operations (OMOs). In the model, monetary injections through OMOs, together with differentiated collateral regulation in the banking sector, directly affect banks' loan capacities, which then influence sectoral investments and aggregate GDP. The quantitative analysis shows that the 2009–2010 monetary expansion explains nearly 66\% of the rise in GDP growth. Moreover, balancing credit allocation across sectors and applying unified banking regulations jointly enhance the GDP growth rate by 1.65 percentage points, with the contribution of the unified banking regulations proving more important.",

keywords = "Bank credit channel, Chinese economy, Monetary stimulus, Open market operation rule",

author = "Min Zhang and Yahong Zhang",

note = "Publisher Copyright: {\textcopyright} 2022 Elsevier Inc.",

year = "2022",

month = aug,

doi = "10.1016/j.chieco.2022.101825",

language = "英语",

volume = "74",

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T1 - Monetary stimulus policy in China

T2 - The bank credit channel

AU - Zhang, Min

AU - Zhang, Yahong

PY - 2022/8

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N2 - This paper develops a novel while plausible way to model the Chinese monetary transmission via open market operations (OMOs). In the model, monetary injections through OMOs, together with differentiated collateral regulation in the banking sector, directly affect banks' loan capacities, which then influence sectoral investments and aggregate GDP. The quantitative analysis shows that the 2009–2010 monetary expansion explains nearly 66% of the rise in GDP growth. Moreover, balancing credit allocation across sectors and applying unified banking regulations jointly enhance the GDP growth rate by 1.65 percentage points, with the contribution of the unified banking regulations proving more important.

AB - This paper develops a novel while plausible way to model the Chinese monetary transmission via open market operations (OMOs). In the model, monetary injections through OMOs, together with differentiated collateral regulation in the banking sector, directly affect banks' loan capacities, which then influence sectoral investments and aggregate GDP. The quantitative analysis shows that the 2009–2010 monetary expansion explains nearly 66% of the rise in GDP growth. Moreover, balancing credit allocation across sectors and applying unified banking regulations jointly enhance the GDP growth rate by 1.65 percentage points, with the contribution of the unified banking regulations proving more important.

KW - Bank credit channel

KW - Chinese economy

KW - Monetary stimulus

KW - Open market operation rule

UR - https://www.scopus.com/pages/publications/85133457952

U2 - 10.1016/j.chieco.2022.101825

DO - 10.1016/j.chieco.2022.101825

M3 - 文章

AN - SCOPUS:85133457952

SN - 1043-951X

VL - 74

JO - China Economic Review

JF - China Economic Review

M1 - 101825

ER -

Monetary stimulus policy in China: The bank credit channel

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Keywords

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