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Monetary Policy Instruments and Bank Risks in China

Author

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  • Zhongyuan Geng

    (School of Management, Harbin Institute of Technology, NanGang District, Harbin, P.R. China)

  • Xue Zhai

    (School of Management, Harbin Institute of Technology, NanGang District, Harbin, P.R. China)

Abstract

The authors use a panel data regression model to examine the effects of main monetary policy instruments on commercial bank risks in China from 1998 to 2011. The interest rate has a positive effect on bank risk while the interest rate margin, the reserve requirement ratio and open market operation have a negative effect. Among the three monetary policy instruments, the reserve requirement ratio has the greatest effect on bank risk, the interest rate (the interest rate margin) the second largest and the open market operation the weakest. Their findings provide guidance to the monetary authority and regulatory authorities in monetary policy and banking regulation in China.

Suggested Citation

  • Zhongyuan Geng & Xue Zhai, 2013. "Monetary Policy Instruments and Bank Risks in China," International Journal of Asian Business and Information Management (IJABIM), IGI Global, vol. 4(2), pages 57-71, April.
    • Handle: RePEc:igg:jabim0:v:4:y:2013:i:2:p:57-71
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    Cited by:

    1. Chang Liu & Dongtao Lin & Yifeng Wang & Shuai Qi, 2023. "A new market risk management approach for commercial banks' fixed‐income securities trading accounts," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 225-235, January.

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