The People’s Republic of China’s Interest Rate Pass-Through
Notwithstanding China’s economic liberation and performances, the country’s Central Bank has been perusing interest rate dual-track system, i.e., the control over the deposit and loan interest rates and a free market determination of interest rates of the inter-bank and bond markets. Therefore, Chi...
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| Main Author: | |
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| Format: | Conference or Workshop Item |
| Language: | English |
| Published: |
2017
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| Subjects: | |
| Online Access: | http://repo.uum.edu.my/23060/1/2nd%20IRC%202017%2033.pdf http://repo.uum.edu.my/23060/ |
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| Summary: | Notwithstanding China’s economic liberation and performances, the country’s Central Bank has
been perusing interest rate dual-track system, i.e., the control over the deposit and loan interest rates and a free market determination of interest rates of the inter-bank and bond markets. Therefore, China provides an interesting case to study the interest rate pass-through. The empirical results reveal that both the short- and
long-run interest rate pass-through are very incomplete (low).The bonds test result suggests no long-run relationship between the Central Bank counter cyclical monetary policy and the commercial banks' lending rate in the credit markets.These are much different than those reports in most of advanced and emerging
economies and suggest that the Central Bank lacks of credibility in conducting its monetary policy. |
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