Scandinavian Working Papers in Economics
HomeAboutSeriesSubject/JEL codesAdvanced Search
Institute for Economies in Transition, Bank of Finland BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland

No 9/2015:
Monetary policy transmission in China: A DSGE model with parallel shadow banking and interest rate control

Michael Funke (), Petar Mihaylovski () and Haibin Zhu ()

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.

Keywords: DSGE model; monetary policy; financial market reform; shadow banking; China; (follow links to similar papers)

JEL-Codes: E32; E42; E52; E58; (follow links to similar papers)

51 pages, March 9, 2015

Additional appendix

Before downloading any of the electronic versions below you should read our statement on copyright.
Download GhostScript for viewing Postscript files and the Acrobat Reader for viewing and printing pdf files.

Full text versions of the paper:

dp0915.pdf    PDF-file
Files with additional material for the paper:
dp0915_app.pdf    Appendix, PDF-file
Download Statistics

Questions (including download problems) about the papers in this series should be directed to Päivi Määttä ()
Report other problems with accessing this service to Sune Karlsson () or Helena Lundin ().

Programing by
Design by Joachim Ekebom

Handle: RePEc:hhs:bofitp:2015_009 This page was generated on 2015-03-18 15:02:31