Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212762 
Authors: 
Year of Publication: 
2013
Series/Report no.: 
BOFIT Discussion Papers No. 7/2013
Publisher: 
Bank of Finland, Institute for Economies in Transition (BOFIT), Helsinki
Abstract: 
This paper focuses on the role the bank lending channel in transmission of monetary policy in China. Using unbalanced quarterly panel data from 2Q2000 to 4Q2011, a one-step GMM estimator is applied to establish the existence the bank lending channel. The findings suggest central bank monetary policy asymmetrically affects bank lending behavior. Small banks are found more sensitive to contractionary monetary policy in the Chinese context. Well capitalized banks appear to be more likely to adjust their lending behaviors in response to expansionary monetary policy, and conversely, undercapitalized banks tend to adjust with the advent of contractionary monetary policy. The importance of the bank lending channel declines after China introduced stricter capital regulations in early 2004, but the effect is still apparent in times of expansionary policy.
Subjects: 
bank characteristics
capital regulation
bank lending channel
asymmetric effects
JEL: 
Q20
Q20
E52
Persistent Identifier of the first edition: 
ISBN: 
978-952-6699-06-6
Document Type: 
Working Paper

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