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Does non-bank fintech development hurt the effect of targeted monetary policy tools? Micro evidence from China

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  • Wang, Xi
  • Tang, Yanfei

Abstract

Since the financial crisis, central banks have implemented unconventional monetary policies, while fintech has developed rapidly and reshaped the credit market. Using firm data from China, this paper empirically tests whether the development of non-bank fintech influences the effect of targeted monetary policy tools. We find that targeted reserve requirement ratio (RRR) cuts in China expand the borrowing amounts of targeted micro and small enterprises (MSEs), but have no effect on their borrowing costs. Moreover, non-bank fintech increases the effect of targeted RRR cuts on MSEs' borrowing amounts, while it does not change the policy effect on borrowing costs.

Suggested Citation

  • Wang, Xi & Tang, Yanfei, 2024. "Does non-bank fintech development hurt the effect of targeted monetary policy tools? Micro evidence from China," Finance Research Letters, Elsevier, vol. 62(PA).
    • Handle: RePEc:eee:finlet:v:62:y:2024:i:pa:s154461232400151x
    DOI: 10.1016/j.frl.2024.105121
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    Keywords

    Targeted reserve requirement ratio cuts; Micro and small enterprises; Enterprises’ borrowing; Fintech;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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