UM
Monetary policy and interest rate rigidity in China
M.-H. Liu; D. Margaritis; A. Tourani-Rad
2009-03-30
Source PublicationApplied Financial Economics
ISSN0960-3107
Volume19Issue:8Pages:647–657
Abstract

This study examines the conduct of monetary policy and the setting of deposit and lending rates in China. As China is still in the transitional stage from a centrally planned economy to a market economy, State-Owned Enterprises and banks are being restructured and financial markets are being developed. Our findings show that there is a long-term relationship between interest rates and inflation, but the relationship is weak. In the short run, the central bank adjusts deposit and lending rates downward faster than they adjust them upwards. The weak long-term relationship reflects the fact that the interest rate as a tool of monetary policy is rather ineffective in China and the asymmetric adjustment speed shows that interest rates are kept deliberately below their equilibrium levels for the state-sponsored objective of stimulating economic growth, creating jobs and maintaining financial stability.

DOIhttps://doi.org/10.1080/09603100801998576
Language英语
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Document TypeJournal article
CollectionUniversity of Macau
Faculty of Business Administration
Corresponding AuthorM.-H. Liu
AffiliationFaculty of Business, Auckland University of Technology, WF907, AUT, Private Bag 92006, Auckland, 1020 New Zealand
Recommended Citation
GB/T 7714
M.-H. Liu,D. Margaritis,A. Tourani-Rad. Monetary policy and interest rate rigidity in China[J]. Applied Financial Economics,2009,19(8):647–657.
APA M.-H. Liu,D. Margaritis,&A. Tourani-Rad.(2009).Monetary policy and interest rate rigidity in China.Applied Financial Economics,19(8),647–657.
MLA M.-H. Liu,et al."Monetary policy and interest rate rigidity in China".Applied Financial Economics 19.8(2009):647–657.
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