Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212819 
Year of Publication: 
2015
Series/Report no.: 
BOFIT Discussion Papers No. 9/2015
Publisher: 
Bank of Finland, Institute for Economies in Transition (BOFIT), Helsinki
Abstract: 
The paper sheds light on the interplay between monetary policy, the commercial banking sector and the shadow banking sector in mainland China by means of a nonlinear stochastic general equilibrium (DSGE) model with occasionally binding constraints. In particular, we analyze the impacts of interest rate liberalization on monetary policy transmission as well as the dynamics of the parallel shadow banking sector. Comparison of various interest rate liberalization scenarios reveals that monetary policy results in increased feed-through to the lending and investment under complete liberalization. Furthermore, tighter regulation of interest rates in the commercial banking sector in China leads to an increase in loans provided by the shadow banking sector.
JEL: 
E32
E42
E52
E58
Persistent Identifier of the first edition: 
ISBN: 
978-952-323-033-0
Document Type: 
Working Paper

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