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The impact of shadow banking on the implementation of Chinese monetary policy

Tommaso Gabrieli (), Keith Pilbeam () and Bingxi Shi ()
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Keith Pilbeam: University of London
Bingxi Shi: Fubon Bank China

International Economics and Economic Policy, 2018, vol. 15, issue 2, No 9, 429-447

Abstract: Abstract This paper empirically analyses the relationship between the shadow banking system and implementation of monetary policy in China using the VECM methodology. We show that an increase in the size of shadow banking sector increases the independence of bank lending from the policies of the People Bank of China. We also find that Shadow Banking works in an asymmetric fashion in that it amplifies increases in the money supply but weakens the effects of restrictive interest rate-based monetary policy decisions.

Keywords: Shadow banking; Chinese economy; Monetary policy (search for similar items in EconPapers)
JEL-codes: E44 E50 G21 G23 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/s10368-017-0397-z

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