The Micro-Effect of Monetary Policy on the Misallocation of Credit-Reference-Cited by-同舟云学术

The Micro-Effect of Monetary Policy on the Misallocation of Credit

Published:2024-05-20 Issue:3 Volume:28 Page:494-501
ISSN:1883-8014
Container-title:Journal of Advanced Computational Intelligence and Intelligent Informatics
language:en
Short-container-title:JACIII

Author:

Wu Fan¹,Hu Ridong²

Affiliation:

1. College of Economics and Finance, Huaqiao University, No.269 Chenghua North Road, Quanzhou, Fujian 362021, China

2. Institute of Quantitative Economics, Huaqiao University, No.668 Jimei Avenue, Jimei District, Xiamen, Fujian 361021, China

Abstract

The structural effects of monetary policy and these effects impact on credit allocation are crucial facets of monetary policy research. This study initially estimates China’s monetary policy based on the GDP growth target and CPI target found in the Chinese Government’s Annual Work Report. Subsequently, it quantifies the extent of credit misallocation among Chinese firms using data from listed companies from the years 2013 to 2022. Finally, we empirically investigate the repercussions of expansionary monetary policy shocks on credit misallocation, focusing on micro-firms. Empirical findings reveal that expansionary monetary policy significantly exacerbates credit misallocation, particularly in underfinanced firms. Mechanistic analysis suggests that a preference for loan size in lending behavior constitutes a major factor contributing to credit misallocation among firms.

Publisher

Fuji Technology Press Ltd.

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