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Impact of the Joint-Stock Reform of Commercial Banks on the Effectiveness of Monetary Policy in China

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  • Xianming Fang
  • Yu Jiang

Abstract

Over the past decade, the Chinese government has conducted the joint-stock reform of state-owned commercial banks. The joint-stock reform improves the marketization level of the ownership structure of commercial banks and consequently leads to impacts on the effectiveness of monetary policy. This paper first presents the impacting mechanisms of the joint-stock reform of commercial banks on the effectiveness of monetary policy and then constructs an empirical model to test those impacts. The empirical results show that the increasing degree of joint-stock reform of commercial banks enhances the effectiveness of expansionary monetary policy but weakens the effectiveness of contractionary monetary policy in China. Key words: Commercial banks, Joint-stock reform, Monetary policy, Price level, China.JEL: E31, G21.

Suggested Citation

  • Xianming Fang & Yu Jiang, 2016. "Impact of the Joint-Stock Reform of Commercial Banks on the Effectiveness of Monetary Policy in China," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 63(3), pages 325-338.
    • Handle: RePEc:voj:journl:v:63:y:2016:i:3:p:325-338:id:28
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    Keywords

    Commercial banks; Joint-stock reform; Monetary policy; Price level; China;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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