 On the People’s Bank of China’s Financial Strength and Policy OutcomesJournal of Central Banking Theory and Practice, 2020, vol. 9, issue 3, 135-161 Abstract: This paper measures the financial strength of the People’s Bank of China from the perspective of balance sheets, and then examine empirically whether its financial strength influences its policy commitments given its financial conditions. The econometric results suggest that, first, the financial strength of the People’s Bank of China does affect its policy performance, although the effects are weak and overall results lack robustness with respect to the econometric technique and the choice of alternative measures of financial strength. Second, alternative financial strength indicator plays different role in helping the People’s Bank of China achieve its alternative policy objectives. Therefore, maintaining benign financial conditions and a resilient balance sheet are necessary pre-conditions for the People’s Bank of China to achieve desirable policy outcomes. Third, the People’s Bank of China’s current standalone finance is healthy under our stressing tests, despite certain concerns attained. Keywords: Financial Strength; The People’s Bank of China; Balance Sheet Analysis; Stress Testing; Policy Performance (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:cbk:journl:v:9:y:2020:i:3:p:135-161 Access Statistics for this article More articles in Journal of Central Banking Theory and Practice from Central bank of Montenegro Contact information at EDIRC. |
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