Advertisement

Transmission I: Inside the Banking Black Box

  • Michael BeggsEmail author
  • Luke Deer
Chapter
  • 127 Downloads

Abstract

This is the first of a pair of chapters opening the ‘black box’ of the banking system to understand the transmission mechanism through which the People’s Bank of China tried to influence its money and credit intermediate target variables. Here we discuss two unsatisfactory visions of the process: the simple bank money multiplier approach, and the ‘industrial organisation’ framework treating banks as intermediaries of ‘funds’ between depositors and borrowers. Chinese policymakers rejected both of these ways of looking at policy transmission through banks.

Keywords

Monetary policy China Transmission Money multiplier Industrial organisation 

References

  1. Chen, Hongyi, Qianying Chen, and Stefan Gerlach. 2013. “The implementation of monetary policy in China: The interbank market and bank lending.” In Bang Nam Jeon and María Pía Olivero (eds.). Global banking, financial markets and crises, pp. 31–69. Bingley: Emerald Group Publishing.CrossRefGoogle Scholar
  2. Chen, Hongyi, Michael Funke, Ivan Lozev, and Andrew Tsang. 2017. “To guide or not to guide? Quantitative monetary policy tools and macroeconomic dynamics in China.” Bank of Finland Institute for Economies in Transition Discussion Papers 3.Google Scholar
  3. Feyzioglu, Tarhan, Nathan Porter, and Elod Takats. 2009. “Interest rate liberalisation in China.” IMF Working Papers 09/171.Google Scholar
  4. Freixas, Xavier, and Jean-Charles Rochet. 2008. Microeconomics of banking. Cambridge, MA: MIT Press.Google Scholar
  5. Gao, Zhanjun. 2007. “The inter-bank bond market.” In Yang Li (ed.). China’s banking & financial markets: The internal research report of the Chinese government, pp. 191–222. Singapore: Wiley.Google Scholar
  6. Geiger, Michael. 2010. Monetary policy in China: Institutions, targets, instruments and strategies. Dissertation, Bayerischen Julius-Maximillians-Universistat Wurzburg.Google Scholar
  7. Goodhart, Charles A. E. 1989. Money, information, and uncertainty. Houndmills: Macmillan.Google Scholar
  8. He, Dong, and Honglin Wang. 2011. “Dual-track interest rates and the conduct of monetary policy in China.” Hong Kong Institute for Monetary Research Working Paper 21.Google Scholar
  9. He, Dong, and Honglin Wang. 2012. “Dual-track interest rates and the conduct of monetary policy in China.” China Economic Review 23, pp. 928–947.CrossRefGoogle Scholar
  10. Mishkin, Frederic S. 1995. Economics of money, banking, and financial markets, 4th ed. New York: HarperCollins.Google Scholar
  11. People’s Bank of China. 2005. Monetary Policy Report, Quarter 4. Beijing: People’s Bank of China.Google Scholar
  12. Porter, Nathan, and TengTeng Xu. 2009. “What drives China’s interbank market?” IMF Working Paper 09/189.Google Scholar
  13. Porter, Nathan, and TengTeng Xu. 2016. “Money-market rates and retail interest regulation in China: The disconnect between interbank and retail credit conditions.” International Journal of Central Banking 12 (1), pp. 143–198.Google Scholar
  14. Sun, Guofeng. 2015. Reforms in China’s monetary policy: A frontbencher’s perspective. New York: Palgrave Macmillan.Google Scholar
  15. Yong, Cao. 2011. “The persistence of strong money supply growth in China: The forces of endogenous determinants.” Banks and Bank Systems 6 (4), pp. 33–48.Google Scholar

Copyright information

© The Author(s) 2019

Authors and Affiliations

  1. 1.Political EconomyUniversity of SydneySydneyAustralia
  2. 2.FinanceUniversity of SydneySydneyAustralia

Personalised recommendations