1. bookVolume 9 (2020): Issue 3 (September 2020)
Journal Details
License
Format
Journal
eISSN
2336-9205
First Published
11 Mar 2014
Publication timeframe
3 times per year
Languages
English
access type Open Access

On the People’s Bank of China’s Financial Strength and Policy Outcomes

Published Online: 18 Sep 2020
Volume & Issue: Volume 9 (2020) - Issue 3 (September 2020)
Page range: 135 - 161
Received: 12 Mar 2019
Accepted: 27 Jun 2019
Journal Details
License
Format
Journal
eISSN
2336-9205
First Published
11 Mar 2014
Publication timeframe
3 times per year
Languages
English
Abstract

This paper measures the financial strength of the People’s Bank of China from the perspective of balance sheets, and then examine empirically whether its financial strength influences its policy commitments given its financial conditions. The econometric results suggest that, first, the financial strength of the People’s Bank of China does affect its policy performance, although the effects are weak and overall results lack robustness with respect to the econometric technique and the choice of alternative measures of financial strength. Second, alternative financial strength indicator plays different role in helping the People’s Bank of China achieve its alternative policy objectives. Therefore, maintaining benign financial conditions and a resilient balance sheet are necessary pre-conditions for the People’s Bank of China to achieve desirable policy outcomes. Third, the People’s Bank of China’s current standalone finance is healthy under our stressing tests, despite certain concerns attained.

Keywords

JEL Classification

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