Assessing Effectiveness of Structural Monetary Policy in China

IF 5.3 3区经济学 Q1 ECONOMICS

Asian Economic Papers Pub Date : 2023-10-16 DOI:10.1162/asep_a_00873

Yiping Huang, Yan Shen, Danxu Cheng, Xinyu Chen

{"title":"Assessing Effectiveness of Structural Monetary Policy in China","authors":"Yiping Huang, Yan Shen, Danxu Cheng, Xinyu Chen","doi":"10.1162/asep_a_00873","DOIUrl":null,"url":null,"abstract":"Abstract Structural monetary policy (SMP)—differentiated policy action targeting specific economic activity— has become more frequently applied by major central banks lately, although the practice of developmental central banking has been in existence for quite some time. The effectiveness of such structural monetary policy, however, has not been adequately evaluated. In this paper, we attempt to provide a comprehensive analysis of SMP introduced by the People's Bank of China and also to offer a broad framework for thinking about SMP. We first document the brief history and main components of China's SMP and estimate the narrow- and broad-measures of SMP accounting for 17.9 percent and 27.9 percent of base money, respectively, at the end of 2022. We then discuss two key factors determining success of SMP: bank credit flows to the targeted area and risk implications for banks. By applying the difference-in-difference and panel data analysis approaches using a monthly data set of city commercial bank loans, we evaluate the impacts of targeted required reserve ratio (RRR) cuts in 2019 and 2020 on small and medium-sized enterprise lending. No statistically significant impact is found, whether in the short run or in the long run, and whether for medium-sized enterprises or for micro and small businesses). We conclude that, as no statistically significant impact of targeted RRRs are found, SMP's effectiveness, if exists at all, might be temporary; when facing impaired monetary policy transmission, it is important to conduct careful analysis of its effectiveness and sustainability.","PeriodicalId":52020,"journal":{"name":"Asian Economic Papers","volume":null,"pages":null},"PeriodicalIF":5.3000,"publicationDate":"2023-10-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Asian Economic Papers","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1162/asep_a_00873","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}

引用次数: 0

Abstract

Abstract Structural monetary policy (SMP)—differentiated policy action targeting specific economic activity— has become more frequently applied by major central banks lately, although the practice of developmental central banking has been in existence for quite some time. The effectiveness of such structural monetary policy, however, has not been adequately evaluated. In this paper, we attempt to provide a comprehensive analysis of SMP introduced by the People's Bank of China and also to offer a broad framework for thinking about SMP. We first document the brief history and main components of China's SMP and estimate the narrow- and broad-measures of SMP accounting for 17.9 percent and 27.9 percent of base money, respectively, at the end of 2022. We then discuss two key factors determining success of SMP: bank credit flows to the targeted area and risk implications for banks. By applying the difference-in-difference and panel data analysis approaches using a monthly data set of city commercial bank loans, we evaluate the impacts of targeted required reserve ratio (RRR) cuts in 2019 and 2020 on small and medium-sized enterprise lending. No statistically significant impact is found, whether in the short run or in the long run, and whether for medium-sized enterprises or for micro and small businesses). We conclude that, as no statistically significant impact of targeted RRRs are found, SMP's effectiveness, if exists at all, might be temporary; when facing impaired monetary policy transmission, it is important to conduct careful analysis of its effectiveness and sustainability.

查看原文本刊更多论文

中国结构性货币政策有效性评估

结构性货币政策(SMP)——针对特定经济活动的差异化政策行动——最近被主要央行越来越频繁地应用，尽管发展性央行的做法已经存在了相当长的一段时间。然而，这种结构性货币政策的有效性尚未得到充分评估。在本文中，我们试图对中国人民银行引入的SMP进行全面分析，并提供一个思考SMP的广泛框架。我们首先记录了中国SMP的简史和主要组成部分，并估计到2022年底，SMP的狭义和广义指标分别占基础货币的17.9%和27.9%。然后，我们讨论了决定SMP成功的两个关键因素:银行信贷流向目标地区和对银行的风险影响。本文利用城市商业银行月度贷款数据集，运用差中差和面板数据分析方法，评估了2019年和2020年定向降准对中小企业贷款的影响。无论是短期还是长期，无论是中型企业还是微型和小型企业，都没有发现统计上显著的影响。我们的结论是，由于没有发现目标rrr的统计显著影响，SMP的有效性，如果存在的话，可能是暂时的;面对货币政策传导受损，对其有效性和可持续性进行认真分析十分重要。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

求助全文

约1分钟内获得全文求助全文

来源期刊

Asian Economic Papers ECONOMICS-

CiteScore

7.50

自引率

0.00%

发文量

期刊介绍： The journal Asian Economic Papers (AEP) is supported by several prominent institutions, including the Center for Sustainable Development at Columbia University in the United States. This shows that there is a strong emphasis on sustainable development within the journal's scope. Additionally, the Korea Institute for International Economic Policy in South Korea, the UN Sustainable Development Solutions Network (SDSN) in Malaysia, and the Economic Research Institute for ASEAN and East Asia in Indonesia also sponsor AEP. The articles published in AEP focus on conducting thorough and rigorous analyses of significant economic issues pertaining to specific Asian economies or the broader Asian region. The aim is to gain a deeper understanding of these issues and provide innovative solutions. By offering creative solutions to economic challenges, AEP contributes to the discourse and policymaking that impact the Asian economies and region as a whole.