Summary:
Since 2014, Chinese commercial banks have been increasingly active in issuing bonds (including interbank certificates of deposit) for financing, which is reflected, first, in a considerable increase in the proportion of bank bond liabilities to total liabilities and, second, in the considerable share of bank bonds and interbank certificates of deposit in China's asset market. In this context, we focus on two important issues. First, we examine why there are large-scale commercial bank bond financing transactions in China, examining the structural characteristics of the Chinese financial market and the financing motivations of financial institutions underlying these transactions. Second, we analyze the impact that improving banks' bond financing capabilities has on policy effectiveness, especially the effects of monetary policy (encompassing both scale and structural effects), which are closely related to the banking system. The literature mainly explores the active financing behavior of banks from the perspective of credit asset securitization, and does not accurately depict the characteristics of bond financing. Furthermore, it does not provide a detailed description of China's financial market and regulatory policy characteristics, and is thus unable to provide complete answers to the above issues. The research in this article begins with the structure of China's financial market, financial regulatory policies, and the characteristics of bond liabilities, analyzing the motivation of bond financing transactions of Chinese commercial banks, and the impact of bank bond financing capacity on the transmission effect of monetary policy. Specifically, the core setting of the theoretical model in this article reflects the following characteristics of and facts regarding China. First, the setting reflects the heterogeneity of financial institutions in China. China's small and medium-sized banks have higher deposit costs and require more high-quality collateral assets to obtain reserves than large banks, whereas the fund sector can use both sovereign bonds and bank bonds to meet collateral needs. The second characteristic is the constraints imposed by macro prudential regulation on bank credit. The banking system is required to reserve a certain proportion of sovereign bonds as liquid assets for deposit liabilities to meet liquidity regulatory needs. Small and medium-sized banks often face capital constraints and are unable to allocate more credit lines to mortgage loans, which have lower risk weights than other loans. The third characteristic is that bond liabilities have a higher degree of marketization pricing than deposit liabilities, and differ from deposit liabilities in terms of debt stability and underlying assets. Therefore, bond liabilities have the advantage that banks do not need to pay reserves and liquidity management costs. Furthermore, some bank bonds have the attribute of subordinated bonds and can be used as capital to absorb risk losses under certain conditions. The literature on the Chinese financial sector, the main theoretical source of this article, comprehensively confirms the above-mentioned heterogeneity of financial institutions and the characteristics of regulatory policies. The results of the model developed for this study indicate that the basic trading structure and motivation for using bank bonds are as follows. First, the deposit interest rates and collateral costs of large banks are lower than those of small and medium-sized banks; thus, large banks are naturally willing to allocate more low-cost capital to them by purchasing small and medium-sized bank bonds. Second, to improve their credit rating and expand their bond issuance quotas, small and medium-sized banks facing capital constraints may supplement their capital by issuing subordinated bonds, or even purchasing the ordinary bonds of large banks, but at the cost of experiencing financial losses. Third, the fund sector is willing to purchase two types of bank bonds to meet collateral needs. Under this transaction structure, we find that improving banks' bond financing capacity directly reduces the capital cost and the reserve borrowing and lending collateral costs of small and medium-sized banks. It can also reduce the liquidity supervision cost by saving treasury bonds (reducing the premium on treasury bonds) and the quasi out statement effect; that is, the transactions involving banks selling bank bonds to the fund sector can directly reduce the liquidity supervision demands of the banking system. In addition, more collateral is provided to the fund sector. These effects greatly alleviate the “liquidity, funding, and interest rate constraints” of monetary policy transmission that the People's Bank of China raises as issues of concern, ultimately enhancing the ability of monetary policy to affect the credit scale of financial institutions, especially small and medium-sized banks and fund departments. Indeed, small and medium-sized financial institutions are constrained by capital and collateral costs as a result of improving the financing capacity of bank bonds. The main conclusion and policy implications of this article are that improving the financing capacity of bank bonds can improve the transmission effect of monetary policy in terms of both the scale and comprehensiveness of credit provision, which is valuable in the context of promoting China's stable growth and structural adjustment policies. However, simultaneously, it increase banks' preferences for low-risk mortgage loans to serve as underlying assets for the bonds, leading to new credit structure distortion effects. It may also weaken the financial system's resilience to shocks by enhancing debt interconnectivity between banks.
[1]郭晔、程玉伟和黄振,2018,《货币政策、同业业务与银行流动性创造》,《经济研究》第5期,第65~81页。 [2]刘畅、刘冲和马光荣,2017,《中小金融机构与中小企业贷款》,《经济研究》第8期,第65~77页。 [3]林毅夫和李永军,2001,《中小金融机构发展与中小企业融资》,《经济研究》第1期,第10~18+53+93页。 [4]罗煜、张祎和朱文宇,2020,《基于银行流动性管理视角的宏观审慎与货币政策协调研究》,《金融研究》第10期,第19~37页。 [5]马勇和姚驰,2021,《双支柱下的货币政策与宏观审慎政策效应——基于银行风险承担的视角》,《管理世界》第6期,第51~69页。 [6]邵新建、王兴春、肖立晟和覃家琦,2020,《基础货币投放渠道变迁、资金来源竞争与银行理财产品的崛起》,《中国工业经济》第7期,第155~173页。 [7]王曦和金钊,2021,《同业市场摩擦、银行异质性与货币政策传导》,《经济研究》第10期,第56~71页。 [8]温信祥和苏乃芳,2016,《大资管、影子银行与货币政策传导》,《金融研究》第10期,第38~54页。 [9]徐明东和陈学彬,2011,《中国国际收支顺差的流动性分配效应与银行贷款渠道检验》,《世界经济》第8期,第112~133页。 [10]徐明东和陈学彬,2012,《货币环境、资本充足率与银行风险承担》,《经济研究》第7期,第48~62页。 [11]庄毓敏和张祎,2021,《流动性覆盖率监管会影响货币政策传导效率吗?——来自中国银行业的证据》,《金融研究》第11期,第1~21页。 [12]Brunnermeier, Markus K.. 2016. “The I Theory of Money,” National Bureau of Economic Research. [13]Kahn, Jay R.. 2018. “Corporate Demand for Safe Assets and Government Crowding-in,” Ssrn Electronic Journal. [14]Lagos, R., and R. Wright. 2005. “A Unified Framework for Monetary Theory and Policy Analysis,” Journal of Political Economy, 113(3):463~484. [15]Rocheteau, G., R. Wright, and C. Zhang. 2018. “Corporate Finance and Monetary Policy,” American Economic Review, 108(4-5):1147~1186. [16]Williamson, Stephen D.2012. “Liquidity, Monetary Policy, and the Financial Crisis: A New Monetarist Approach,” American Economic Review, 102(6):2570~2605. [17]Williamson, Stephen D.2019. “Interest on Reserves, Interbank Lending, and Monetary Policy,” Journal of Monetary Economics, 101(3):14~30.