Time: 9:00am-10:30am April 30,2021

Tencent Webinar: 863 935 127

Abstract: We study how interbank wholesale funding in China influences monetary policy transmission under a dual-track interest-rate system and how it contributes to increasing systemic risks in recent years. By constructing a bank-panel dataset, we find that wholesale funding via interbank certificates of deposit not only facilitates policy interest rates to transmit into loan by non state banks, but also leads to fast growth in their shadow banking activities as an unintended consequence. Accordingly, non state banks with a heavier exposure to wholesale funding witness a larger increase in systemic risks in response to negative shocks to the economy since 2018. We advance a theoretical explanation of our empirical findings and quantify the trade off of banking regulation on wholesale funding between the effectiveness of monetary policy transmission and exposure to systemic risks within this framework.

Speaker Bio: CHEN Kaiji, associate professor of Emory University and researcher of Federal Reserve Bank of Atlanta, obtained his PhD at USC majoring macroeconomics.He has published dozens of papers on global top journals such as American Economic Review, NBER Macroeconomic Annual, American Economic Journal: Macroecomomics and Journal of Monetary Ecomomics.