The Impact of Residents' Leverage Ratio on the Effectiveness of Monetary Policy: Evidence from a Panel of Chinese Prefecture-Level Cities
Journal: Modern Economics & Management Forum DOI: 10.32629/memf.v5i5.2847
Abstract
This paper examines panel data from 127 prefecture-level cities between 2015 and 2023 to investigate the relationship between resident leverage ratios and the effectiveness of monetary policy. The study finds that as resident leverage ratios increase, the effectiveness of monetary policy regulation is diminished. By setting different explanatory and response variables, the article demonstrates that an increase in resident leverage ratios diminishes the effects of quantitative monetary policy and price-based monetary policy. Furthermore, the paper reveals that resident leverage ratios lead to regional heterogeneity in the effectiveness of monetary policy, indicating that in areas with lower resident leverage ratios, the effectiveness of monetary policy is reduced.
Keywords
resident leverage, monetary policy effectiveness, economic growth
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[2]Xie Baosong, Li Xin, Lv Lu. Research on the level of residents' leverage and risk threshold in Sichuan province based on micro data [J]. Southwest Finance, 2019(2): 2-15.
[3]Pan Min, Liu Zhiqi. Does "Leveraging" of residents Promote Consumption? — Empirical evidence from a micro survey of Chinese residents [J]. Financial Research, 2018 (4): 71-87.
[4]Niu Chuangkun, Zhen Maosheng. Paradox and policy orientation of residents' leverage [J]. Banker, 2016(9): 45-48.
[5]Svirydzenka, K. Introducing A New Broad-based Index of Financial Development [R], IMF Working Paper, 2016: no WP/16/5.
[6]Zhou Junyang, Wang Yong, Han Xiaoyu. Deleveraging, Leveraging and Monetary Policy Transmission - A Study Based on New Keynesian Dynamic General Equilibrium [J], International Financial Studies, 2018(5): 24-34.
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